SOLUTION:
To assess the strategy's performance using historical data before applying it in live trading
SOLUTION:
Define metrics to track such as profit, drawdown, and Sharpe ratio
SOLUTION:
To assess the strategy's robustness across various market conditions
SOLUTION:
By providing insights into the strategy’s performance relative to different market indicators
SOLUTION:
By identifying specific market conditions where the strategy performs best
SOLUTION:
Compare the results to previous backtests to see if performance metrics improved
SOLUTION:
Bias due to excluding securities that have failed or been delisted; avoid by using comprehensive datasets that include both active and inactive securities
SOLUTION:
To avoid unrealistic performance results by accurately reflecting the cost of trading