Disadvantages

The main weakness of the for-loop backtester is accuracy in relation to the market. It neglects transactions costs, transaction time, the bid and offer price, and volume. The likelihood of making a mistake by reading a value ahead of time is pretty high (look-ahead bias).

While the code of a for-loop backtester is easy to write, we should still use this type of backtester to eliminate low-performance strategies. If a strategy does not perform well with for-loop backtesters, this means that it will perform even worse on more realistic backtesters.

Since it is important to have a backtester that's as realistic as possible, we will learn how an event-driven backtester works in the following section.

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