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Back testing, or historical performance testing, refers to the hypothetical performance analysis of trading models using historical market data. The results of this testing can guide future live trading. However, in actual trading, many traders conduct back tests subjectively by randomly selecting certain market data, while others do not conduct back tests at all. In reality, many outstanding traders I know systematically perform back tests on their trading models. The level of rigor with which a trader conducts back tests often determines how successful they can be in their trading journey.

The reason why we need to conduct back-tests is because great traders always do so

In the trading industry, there is a debate surrounding the necessity of back testing a trading model. Some argue that certain good models cannot be back tested, particularly those that involve a high degree of subjectivity. Others believe that back testing results have no value in predicting future trading performance as market/>/>