Traders Improved Trading Podcast

Stop Backtesting! It will destroy you as a trader | Traders Improved (#65)


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I understand that this is a controversial topic but I believe it is important that you approach it with an open mind.

Backtesting might have its place and purpose, but 99% of all traders will never see any benefit from their backtest.

We can probably all agree that trading is 90% emotions (maybe even more). However, during a backtest, all emotional factors are excluded.

What makes trading hard is letting winners run, cutting losses effectively, waiting for the right situation, staying out of the market when there is no trade and being patient when growing your account.

During backtesting, you fast forward candles, you fast forward holding time, drawdowns and losing streaks are over within minutes and growing an account happens quickly. 

The learning effect is then absolutely 0. That is why backtests never lead to the same results during live trading.

Of course, live trading can be costly, it will take much longer to learn the craft but it's the only way. 

Keep in mind, this is my experience and what I have seen when coaching hundreds of traders over the past 12 years.

If you are not seeing the results you are hoping for, maybe it's time to start questioning your approach. 

 

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Traders Improved Trading PodcastBy Edgewonk / Rolf Schlotmann/ Quantum Trade Solutions GmbH

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