With conventional back-testing software, you can buy and sell with one mouse click, move forward or backward in time as fast as you want, pause for a comfort break, or watch some TV while markets stand still.ĭo you sometimes push the wrong button and move one candle too far and see that it would’ve been better to exit your trade on the previous candle? It’s easy to go back during back-testing, but try to convince your broker that you pressed the wrong button and actually intended to exit your trade on the last candle! The following article provides 6 of the most commonly made mistakes and misconceptions about back-testing, why it is mostly useless and how to correct for the major shortcomings.
Should you really backtest your trading strategy and will it provide accurate information about what you can expect from live trading? Most traders will be left clueless why their trading strategy performed so well during back-testing, but failes miserably in live-trading.
