Methodology
Exactly how our explanations, diagrams and examples are produced — and their limits.
Concepts and definitions
Definitions of backtesting concepts, performance and risk-adjusted metrics, robustness-testing methods and backtesting biases follow established quantitative-finance and statistics literature and reputable practitioner sources. Where a term is used loosely in the industry, we state the precise meaning we adopt and flag ambiguity.
Formulas and calculators
Where we present formulas (CAGR, Sharpe, Sortino and Calmar ratios, drawdown, profit factor, expectancy, Ulcer index), we use the standard textbook definitions and show the assumptions. The client-side calculators implement these formulas directly and run entirely in your browser; results are illustrative and exclude real-world charges (STT, brokerage, slippage) unless stated.
Examples
Examples use Indian-market context — NSE instruments such as Nifty and Bank Nifty, INR amounts and round illustrative figures for clarity. They are teaching scenarios, not live data, backtests or recommendations.
Limitations
All figures and diagrams are educational approximations. Methods such as Monte Carlo, walk-forward analysis and the Kelly criterion rest on assumptions (independence of trades, stationarity, a known edge) that rarely hold exactly in live markets. Backtested and simulated results are hypothetical and never guarantee future outcomes. See our Sources.
Last updated 11 July 2026.