Discussion Forum General Discussion General Leica Discussion I've been testing a bunch of trading strategies lately, and I keep wondering—how
  • #43464
    joeygiron

    I’ve been testing a bunch of trading strategies lately, and I keep wondering—how much can we actually trust backtesting results? In theory, it should give a good idea of how a strategy performs, but in reality, I’ve had cases where a strategy looks bulletproof in testing, only to fail miserably in live trading.

    One time, I spent weeks optimizing a breakout strategy. It showed consistent profits in backtests, almost no drawdowns, and a solid win rate. But when I started trading it live, the results were completely different. Orders weren’t executed the way I expected, spreads ate into my profits, and the strategy just didn’t hold up.

    So, what do you guys think? Is backtesting really reliable, or does it just give us a false sense of security?

  • #43465
    MelanieBriggs234

    That’s a great question, and honestly, I’ve had similar experiences. Backtesting is useful, but it has limits. The biggest issue is that most backtests assume perfect execution—no slippage, no spread changes, no liquidity problems. That’s why even the best-looking strategy in testing can fail in real trading.

    The key is to use a realistic simulator that accounts for these factors. I found that using the best platform to backtest trading strategies helped me avoid over-optimistic results. It lets you test under conditions that are much closer to real market behavior.

    Also, forward testing in a demo or small live account is crucial. Have you tried running your breakout strategy in a demo first before going live? That can help spot issues before they cost real money.

  • #43466
    hemogif293

    Just came across this discussion, and it’s really interesting. I’ve always wondered how much traders actually rely on backtesting. It seems like a good tool for getting an idea of whether a strategy works, but I guess it’s not a perfect predictor of live results.

    I’ve heard some people use Monte Carlo simulations to test the robustness of their strategies. Do you guys ever do that, or is it more of an advanced thing? Also, does backtesting work the same way for stocks and forex, or are there major differences?

  • #43739
    Mr.Darcy

    Backtests may seem like a reliable tool for evaluating the effectiveness of trading strategies, but in practice, they often mislead. The problem is that backtests do not account for many external factors such as changes in liquidity, volatility, as well as actual spreads and slippage during order execution. In general, you look like an experienced investor, so I would recommend you apply to prop firm account for more advanced trading opportunities.  In general, when you move from theory to practice, the market world becomes much more unpredictable, and what worked in the past may turn out to be ineffective now. This doesn’t mean that old tools are useless, but their results should be taken with caution, and any strategy should always be tested on the live market with minimal risks before increasing trading volumes.

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