Backtesting Tips

Hello everyone.

I am relatively new to the world of algotrading. I developed an EA for MT5, to find the right settings I did some backtesting from 2020 to today.

To validate the model, to avoid overfitting, I inserted a little function in the code that delays the opening of positions after a certain number of days. Then I rotated those settings with entry points every 3 days for 500 times, so as to get to mid-2024 (to reach today).

Do you think it is a good method for testing an EA? Are there other methodologies that I have never considered due to my inexperience?

<quote>
LIMITATIONS OF BACKTESTING
One of the primary downsides of back testing is that it can lure the trader into overconfidence about a system based on how it performed in the past. There is always a real danger of curve fitting and data mining to find a perfect system that worked with a set of past market conditions in the past but will never occur again in the future.
The market is a complex, adaptive system that never shows traders the same face twice. Even when traders perform a backtest rigorously and with full knowledge of the limits of its ability to forecast into the future, they will commonly see a large discrepancy between backtest results and actual results from live trading.
There are several potential causes for this discrepancy. Sometimes, traders will backtest a system in isolation and not as part of a full portfolio of strategies. Often back tests may use unrealistic values for slippage and commissions. Many times the backtest will not take into account the human dimension of executing a set of trading rules. Experience shows that this is one of the most overlooked aspects in back testing. Backtesting specifically, and any forecasting method in general, has limits and that’s perhaps the biggest challenge for traders to understand. Some traders place so much reliance on their back testing that the evidence of divergent actual results will not convince them that they missed something important. They might persist in trading a system that will simply not work in the real world. (Attribute this to the overconfidence bias combined with the need to be right.)
Professional engineers and doctors are especially prone to this common problem because of their ingrained belief systems from their professions. Those professions in particular place a premium on being right to be successful, yet in the trading profession, the ability to act with incomplete knowledge and a willingness to be wrong often leads to the best results. While back testing offers many powerful advantages, the professional trader concurrently recognizes the limits of its usefulness.
The professional trader should take back testing results into consideration as a way to select a system to prototype with real money, in real markets with the human factors fully engaged to see what the real world results look like before committing to full production system risk.
<unquote>