06 Aug 2023

Crypto Backtesting - Set Your Perfect Investment

Cryptocurrency investments have become popular, but their unpredictable nature makes it challenging to make informed decisions. Backtesting and in particular Crypto Backtesting is the most useful method that allows investors to simulate their investment strategy using historical data. This method can minimize risks and maximize returns, especially for cryptocurrency investments.

What is Backtesting?

Backtesting is a super technique used by investors to evaluate the performance of their investment strategies. It involves simulating a trading strategy using historical data to test its effectiveness before investing real funds in the market. The aim of backtesting is to identify potential flaws in the strategy and to optimize it to achieve better returns.

As investors look to adapt their trading techniques for the volatile and dynamic nature of the market, backtesting has grown in favor more lately in the cryptocurrency arena as well. The benefit of using a software is that it can quickly and precisely evaluate big volumes of data, allowing investors to test different methods and come to more educated conclusions.

Why is Backtesting Important for Crypto Investing?

Cryptocurrencies are highly volatile and can experience rapid changes in value. Backtesting allows investors to simulate their investment strategy under different market conditions and analyze its performance. Specifically with Crypto Compare Tool investors can evaluate the performance of multiple crypto simultaneously and create a temporary backtesting portfolio to check their historical return.

How to Make a Perfect Investment Strategy Using Backtesting

Creating a perfect investment strategy requires careful planning and analysis. Here are the steps to follow:

1. Choose a Trading Platform

Internet is plantly of trading websites and softwares while you can find very few backtesting platforms, especially in cryptocurrencies niche. It’s good to use some dedicated tools like Compare Chart that let you create a full crypto backtesting strategy together with Portfolio Simulation. 

2. Create the Strategy

Define the investment strategy you want to test. Start by choosing your favorite cryptos and try to think about a good combination of risky and secure cryptos. Make sure to read and understand as much as you can about each crypto in your list so that you do not fall in scam.

3. Gather Data

Normally you can evaluate the historical performance of each crypto separately but with FCT you can also assign to each crypto in your list a value in % and create a Portfolio Backtesting to evaluate the portfolio’s performance with your crypto’s choice.

4. Analyze the Data

Analyze the data using the trading backtesting tools. After the creation of the Crypto List you will find a double chart, one for each crypto in your portfolio and another one for the combination of cryptos with the resulting Backtesting Portfolio.

5. Optimize the Strategy

Identify areas of improvement and make necessary adjustments to the strategy. You can adjust the Backtesting Portfolio by changing cryptos or by modifying the % of cryptos in your portfolio. In this way you can find the perfect Portfolio that fits your risk, profit and loss, win rate and drawdown. Repeat the testing process until you achieve the desired results.

How Our Tool Can Help with Crypto Backtesting

Our tool allows users to compare multiple cryptocurrencies simultaneously and track their historical performance. With Compare Chart, users can create a simulated portfolio with these cryptocurrencies for backtesting. Moreover, it enables users to track a real portfolio performance with the combination of cryptocurrencies. This feature allows users to monitor the performance of their investments in real-time and make necessary adjustments to their investment strategy. To do so users can create a Crypto Watchlist and move directly to an other powerful tool, the Portfolio Simulator.

Accurate Testing of Investment Strategies

One of the key benefits of backtesting is that it allows investors to test their investment strategies in a simulated environment. By analyzing how a strategy would have performed in the past, investors can gain insight into how it might perform in the future. Backtesting can also help investors identify potential pitfalls in their strategies, such as over-reliance on a single cryptocurrency or exposure to a particular risk factor.

Risk Management

Backtesting can also help investors manage risk. By analyzing how a portfolio would have performed in different market conditions, investors can identify potential risks and adjust their strategies accordingly. This can help investors avoid potential losses and increase their chances of success.


Backtesting is also a cost-effective way to test investment strategies. Instead of investing real money in a strategy and risking losses, investors can simulate their strategies using historical data. This can save investors time and money and help them avoid costly mistakes.


Crypto backtesting is an essential tool for investors looking to invest in cryptocurrencies. By simulating a portfolio's performance with historical data, investors can test their investment strategies, manage risk, and avoid costly mistakes. With the right tools and historical data, investors can gain valuable insights into how their strategies would have performed in the past and make informed investment decisions in the future.

It’s suggest to use Backtesting and Portfolio Simulator with other importante blockchain analysis tools like Whales Transactions and News Analysis. You can also check Advanced Chart in which both News and Transactions are shown directly into the chart so that investors can evaluate the impact on price direction.

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