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?