Understand backtest results
Read equity curves, trades, drawdowns, and metrics as a coherent evidence set.
01 Start with behavior
Metrics summarize behavior, but they do not replace inspection. Look at the chart, trade list, and drawdown windows before ranking strategies.
- 1Check whether gains are concentrated in one short period.
- 2Compare average loss against the planned invalidation rule.
- 3Review whether the strategy trades during the intended market regime.
02 Avoid false precision
Small differences in Sharpe ratio or CAGR are rarely meaningful without stability checks. Prefer explanations that remain valid across related tests.
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