When Backtests Meet Reality Part 1 by Johann Christian Lotter
Before you put real money on the line with a trading strategy, you will want to test the strategy to find out if it has a good chance of being profitable going forward. However, there are some important pitfalls to avoid when you go to design a backtest or evaluate the backtest results. Heres a way forward.
Can you trust your backtest? Too often, systems with a great test result fail miserably in live trading. All backtests suffer from some degree of bias ...