Don't Trade Blindly: Backtest Your Crypto Strategy with Python
Introduction Most traders lose money because they guess. Pro traders test. Before you risk a single Dollar on Bitcoin, wouldn't you want to know how your strategy performed during the 2022 crash or the 2024 rally? That is the power of backtesting —simulating a trading strategy on historical data to see if it actually holds water. In this tutorial, we are going to build a backtesting engine from scratch. We will test one of the most famous indicators in crypto: the SMA Crossover (Golden Cross) . Note: In our previous Data Visualization Guide , we learned how to fetch Bitcoin data and plot price charts. Now, let's use that data to find profitable signals. Prerequisites To follow along, you’ll need Python installed and the following libraries. If you haven't installed them yet, run this in your terminal: pip install pandas numpy yfinance matplotlib The Strategy: The Golden Cross For this backtest, we will use a classic trend-following strategy: The Indicators: We use two Si...