Step 6: Backtest and optimize the strategy
Before deploying the AI agent, backtest it using historical data to simulate how it would have performed under various market conditions.
Backtesting: Run the AI model using past market data to see how it would have adjusted the portfolio.
Optimization: Adjust the model based on backtesting results to ensure it meets your portfolio goals and risk tolerance.
You could run the AI agent with historical data from the past two years, simulating market crashes and rallies, to see how well it rebalances the portfolio and minimizes losses or maximizes gains.