GC's Backtest: A New Approach to Preparing for the Future Through the Past

Backtesting is an important process for verifying the effectiveness of investment strategies. On the GC platform, we allow investors to evaluate their strategies against historical data by asking the question, "What if this strategy had been applied over the past N years?" However, GC's backtest is not just a simple simulation. It provides more reliable results by performing market regime assessment, signal validation, and position sizing using the exact same code paths as actual trading.

The Execution Process of GC Backtesting

Users simply need to select the period, universe, and strategy options on the backtesting screen and click the execute button. They will then receive various information such as account-specific returns, MDD (maximum drawdown), Sharpe ratio, and number of trades. For example, when applying data from the past 5 years for a specific strategy, the average annual return might be 12%, and the maximum drawdown could be 15%. This data helps investors intuitively understand how their strategies performed in the past. Thus, investors have the opportunity to refine their judgments and strategies more precisely.

GC's Approach to Reducing Risk

Backtesting is a tool for predicting the future based on past performance, but there are points to be cautious about. The fact is that past performance does not guarantee future results. In particular, it does not perfectly account for slippage, commissions, and market impact, and there is a risk of over-optimization (strategies that only perform well in the past). To mitigate these risks, GC applies walk-forward validation and turnover penalties to aim for a more realistic assessment. For instance, by testing the effectiveness of a strategy incrementally through walk-forward validation, users can compare and adjust performance at each stage.

This approach aligns well with GC's core principle of 'not hiding the basis for judgment.' GC is a tool that helps investors clearly understand the data and processes, allowing them to make decisions based on their own judgment. Investors are not just accepting results; by understanding the process and logic, they can make better decisions.

Conclusion: Investment Decisions Depend on Your Judgment

Through GC's backtesting feature, investors can validate their strategies based on past data and make future investment decisions with greater confidence. However, all investment decisions ultimately depend on one's own judgment. Experience this entire process firsthand at the GC Investor Challenge. Starting October 1, you can begin in just 5 minutes.