What Is Backtesting?

What Is Backtesting?

Backtesting lets you test a trading strategy against historical market data to see how it would have performed. Instead of risking real money, you validate your strategy's logic with past prices.

Why Backtest?

• Validate logic: Does your strategy actually work?

• Measure performance: What returns, drawdown, and win rate can you expect?

• Compare strategies: Which approach performs better?

• Optimize parameters: Find the best indicator settings

• Build confidence: Trade with conviction, backed by data

How It Works in HyperSync

Your Strategy Config
        │
        ▼
┌──────────────────────┐
│  Backtest Engine       │
│                        │
│  1. Fetch historical   │ ← Hyperliquid candle data
│     candle data        │
│                        │
│  2. Calculate          │ ← RSI, MACD, BB, etc.
│     indicators         │
│                        │
│  3. Simulate trades    │ ← Walk through each candle
│     bar by bar         │
│                        │
│  4. Track performance  │ ← PnL, equity curve, metrics
│                        │
│  5. Include funding    │ ← Hyperliquid funding rates
│     rates              │
└──────────────────────┘
        │
        ▼
  Detailed Results Report

What You Get

Performance Metrics

Metric	Description
Total Return	Overall percentage gain/loss
Sharpe Ratio	Risk-adjusted return (higher is better, >1 is good)
Sortino Ratio	Like Sharpe but only penalizes downside volatility
Calmar Ratio	Annual return / max drawdown
Max Drawdown	Largest peak-to-trough decline
Win Rate	Percentage of profitable trades
Profit Factor	Gross profit / gross loss (>1 means profitable)
Average Win/Loss	Average winning trade vs average losing trade
Total Trades	Number of trades executed

Visual Results

• Equity Curve: Chart showing account value over time

• Drawdown Chart: Visualization of drawdown periods

• Trade Markers: Entry and exit points on the price chart

• PnL Distribution: Histogram of trade returns

Trade-by-Trade Breakdown

Every simulated trade is logged:

• Entry time and price

• Exit time and price

• Side (long/short)

• Position size

• PnL (dollar and percentage)

• Duration

Key Features

• Historical Hyperliquid data: Uses real candle data from Hyperliquid

• Funding rate inclusion: Accounts for Hyperliquid's funding rates

• Realistic simulation: Includes slippage estimates and fee calculations

• Custom date ranges: Test any historical period

• Fast execution: Runs in a background worker for non-blocking UX