BT is an abbreviation for Backtest — the process of testing a trading strategy or system against historical market data to evaluate how it would have performed under past conditions. Backtesting is an essential step in strategy development, helping traders identify strengths, weaknesses, and statistical edges before committing real capital. A robust backtest includes sufficient data, accounts for transaction costs and slippage, and avoids overfitting to historical patterns that may not repeat.
Example
“Before going live, she ran a BT of her mean-reversion strategy across five years of data and found it had a 62% win rate with a 1.8 profit factor.”