Backtest of Trading Systems on Candle Charts

TL;DR

This paper develops methods for backtesting trading systems using only candle chart data, focusing on handling ambiguous situations where decisions are not clear-cut.

Contribution

It introduces strategies for backtesting with candle charts in ambiguous scenarios, addressing a gap in existing trading system evaluation methods.

Findings

Proposes calculation methods for candle chart backtesting.

Provides strategies for undecidable trading situations.

Enhances accuracy of backtesting with limited data.

Abstract

In this paper we try to design the necessary calculation needed for backtesting trading systems when only candle chart data are available. We lay particular emphasis on situations which are not or not uniquely decidable and give possible strategies to handle such situations.