Backtests are a way to simulate a strategy's performance using historical data before committing real funds to a bot for live trading. Developed for the benefit of hindsight, back-testing seeks to estimate the performance of a strategy during a past period and assumes that if the strategy worked previously, it has a good chance of working again; conversely, if the concept has not worked well in the past, it may not work well in the future.
When using the backtest feature, traders should strive to constantly refine their methodology and parameters by continually studying charts, past and current market movements, patterns, indicators, and other data that can give them an edge. No one bot or a set of parameters works in every market condition. Ultimately, it is up to the trader to determine through back-testing and refining how to then systematically make adjustments that capture returns and reduce risk simultaneously.