---
title: "Backtesting Methodology — EasySwing.trading"
description: "How EasySwing.trading backtests swing trading strategies: walk-forward methodology, regime approximation, survivorship bias, and entry models."
url: https://easyswing.trading/methodology
updated: 2026-05-05
---

# Backtesting Methodology

How we test strategies, what the numbers mean, and where the limitations are.

## 1. Strategy Detection

Our strategy engine uses pure price and volume data to detect swing trading setups. No fundamental data (earnings, revenue) is used in the detection phase. Each of the 7 strategies has its own detector function that scans OHLCV bars for specific technical patterns.

A strategy fires when its detector finds a valid pattern and the confluence score exceeds the minimum threshold. Each signal gets a grade (A+ through C) based on the composite score.

## 2. Walk-Forward Testing

We use a walk-forward approach, not a static backtest:

1. The strategy engine sees only data up to and including the current bar (no future data)
2. If a BUY signal fires, the entry price is the next day's open (not the signal bar's close)
3. Forward returns are measured 5 and 10 trading days after entry
4. Stop and target hits are checked bar-by-bar within a 10-day window

This prevents lookahead bias — the most common flaw in retail backtesting.

## 3. Regime Approximation

In production, our market regime detector uses a 5-state model (TRENDING_UP, TRENDING_DOWN, RANGING, HIGH_VOLATILITY, TRANSITIONING) incorporating ADX, SPY trend, breadth, and VIX. In backtesting, we use a simplified 2-state approximation: SPY above/below its 200-day SMA.

## 4. Survivorship Bias

Backtests run on currently listed symbols only. Delisted, bankrupt, or acquired stocks are excluded. Since these tend to be losers, actual historical results would likely be worse than reported. Assume the real win rate is several percentage points lower.

## 5. Entry Model

All entries use next-day open. No slippage, commissions, or market impact are modeled. For liquid large-caps, this is a reasonable approximation. For small-caps and low-volume names, actual fills will be worse.

## 6. Relative Strength Ranking

In production, RS is a universe-ranked percentile across ~2,000 stocks. In backtesting, we use raw 6-month return ratio vs SPY, linearly mapped to 0-100. Strategies that rely on RS rank may show different selectivity in backtest vs production.

## 7. Sample Size

Results with fewer than 30 signals are not statistically significant. A strategy showing 80% win rate on 8 signals has an enormous confidence interval. Try longer periods or broader strategy selections for meaningful statistics.

## Disclaimer

Backtested results are hypothetical and do not represent actual trading. Past performance is not indicative of future results. EasySwing.trading is a screening tool — not an investment advisor.

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*This is the LLM-optimized version. [View the interactive page](https://easyswing.trading/methodology) for the human-friendly version.*