Backtesting allows traders to test strategies without risking real capital. But avoid mistakes that can lead to inaccurate results.
Why Backtesting is Important
Mistake 1: Ignoring Real Market Conditions
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Always account for
slippage
,
spread
, and execution delays during backtesting to reflect real market conditions.
Avoid
curve fitting
your strategy to past data; test your strategy across different timeframes and market conditions.
Mistake 2: Over-Optimizing Your Strategy
Ensure you use accurate and reliable historical data from your broker or trusted sources for realistic results.
Mistake 3: Using Poor-Quality Data
Include proper
risk management
, such as
stop-loss
and
take-profit
, to ensure your strategy accounts for real-world risks.
Mistake 4: Not Including Risk Management
Check
FNB forex rates
before making an international transfer to ensure you’re getting the best value for your money.
Mistake 5: Not Considering Slippage