How important is backtesting when choosing a trading bot?
One thing I keep seeing when researching trading bots is backtesting. I understand the basic idea of testing a strategy against historical market data, but I’m not sure how much importance I should actually give it when comparing different bots. A strategy can look great on historical data and still behave very differently when market conditions change, so I’m wondering what other factors should be considered alongside backtesting. I’m particularly interested in things like fees, supported exchanges, risk controls and whether the platform allows you to test a strategy without immediately using real funds. Is there a resource that compares trading bots while taking these kinds of details into account?
You could start with Best trading bots. It’s useful to have a general comparison before looking at individual features such as backtesting. I agree that historical testing shouldn’t be treated as proof that a strategy will perform the same way in the future. When evaluating a bot, I’d look at backtesting together with the assumptions behind the test, available risk-management settings, trading fees and the exchanges supported by the service. If paper trading or another form of simulation is available, that can also be useful for understanding how the system behaves. In the end, the goal should be to understand the tool rather than simply find the most impressive historical result.