The beauty of working with a trading bot lies in the fact that you can backtest your strategies and configurations. That way, you don’t need to simulate your trading to see if it’s going to work out or not.
Professional algorithmic traders continuously backtest their strategies. They have a strategy running live on their investments that they’ve tested on the current market, and they keep creating and testing new strategies. The markets change, and so do their strategies, essential therefore is the backtester.
The backtesting tool tests your strategy in combination with your configuration. It scans when your bot would’ve bought and what the result would’ve been with your current setup. It’s a perfect way to analyze if your Stop-Loss, Trailing Stop-Loss, and other settings are set correct.
We recommend first testing your Strategy Builder strategies so that you have an excellent strategy to work with. You can then start playing around with different configurations.
Your First Backtest
We explain the Backtesting feature more thoroughly in the Backtesting chapter of the documentation. However, let’s test our first strategy and configuration.
Since this is your first time using the Backtesting tool, let’s test the template that we’ve installed when we signed up at Cryptohopper.
Select the currency that you want to backtest and click “Load Existing Config”. All settings are automatically adjusted, as you can see! Select the period you want to backtest the config on. We recommend not setting the period too long, otherwise, it will take very long to analyze it. Also, remember what the professionals do? They use smaller time frames so that their strategies are more effective.
Well, you can see that this needs some adjustments. Alter your configuration until your max profit is acceptable, and your sells with a loss aren’t higher than your successful sells. When the test results look good, click “Deploy this Configuration”. This will change your config to the settings you’ve set in the backtesting tool.
Your Backtest history shows the backtests you’ve done, so you can easily choose and deploy the most successful test.
The “Config Finder” helps you automate this part, but only works with the “Multiple TA Factors” strategy and not with strategies downloaded from the marketplace or the strategy builder. Edit the Multiple TA Factors strategy first in your config -> Strategy -> Select Multiple TA Factors. Do this before you start using the “Config Finder”, otherwise you will keep getting errors that your bot couldn’t find a target.
You are satisfied with what your backtester found? Deploy it immediately and even share it with your friends!
The configurations that your backtester found are saved in the “Best Configurations” tab.
Keep testing your configurations and test your results with paper trading first. It’s the safest way of starting your adventure in the world of automated trading. Because we all know: Past performance does not guarantee future results. Trade safely!