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Understanding Backtesting

79 bytes removed, 20:46, 23 February 2012
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A strategy is a set of [[Signal_Settings|Signals]] applied to a chart. Each [[Signal_Settings|Signalsignal]] is a mechanical technical analysis tool, used to systematically specify market entry or exit points according to a set of trading rules implemented in the signal's algorithm.
<div style="background-color: #E3FBE5;">Note: A strategy has separate [[<span style="color: red;">'''LINK'''</span> /0280_Backtesting/22-8003_StrategyProp.html name=""; Strategy_Properties|Properties]], separate from signals' settings.</div>
Once a strategy is applied to a chart, the backtesting process starts. During the backtesting process, the strategy places trades where they would have occurred the past, according to the set of rules applied. The trades are placed throughout the entire available period of historical data. If strategy is applied to real-time chart, the strategy continues to place new trades as the real-time data is received.