Backtesting
Backtest trading strategies without coding on Horizon. Learn how to read Sharpe ratio, maximum drawdown, win rate, and profit factor before going live.
Backtesting runs your strategy against historical market data so you can evaluate it before risking capital.
Reading the metrics
| Metric | What it tells you |
|---|---|
| Sharpe ratio | Risk-adjusted return. Higher is better; compare similar strategies. |
| Maximum drawdown (MDD) | The largest peak-to-trough loss. Lower is better. |
| Win rate | Share of trades that were profitable. |
| Profit factor | Gross profit ÷ gross loss. Above 1.0 is profitable in-sample. |
Avoid common pitfalls
- Overfitting — a strategy tuned perfectly to the past often fails live. Prefer simple rules that generalize.
- Look-ahead bias — make sure rules only use information available at the time of each decision. Horizon's engine is event-driven to prevent this.
- Ignoring costs — fees and slippage matter; factor them into expectations.
Next steps
When results look promising, connect a broker and read Going live.