Okay, so this is probably beating a dead horse to some of you, but I wanted to share an example I encountered with back testing, that will make some of you laugh, and hopefully be an eye opener for others.
Way back in the day when I still believed in the "Holy Grail" of trading system, I spent a fair amount of time surfing the web searching for that special system that would make me wealthy beyond my wildest dreams. I specifically remember coming across on EA in particular that when back tested seemed to turn mere pennies in to thousands of dollars. Now lucky for me, I was wise enough to test it on a small live account and quickly found this to be too good to be true.
Fast forward to today, know more than I did than, (hopefully ) I went back and found that system I back tested. Know that when I first tested it I most likely did not spend the time to optimize the test results and use the most accurate data (back then my computer was very slow and would take literally hours to run one test). Now thanks to modern technology, I present to you two EXTREMELY different views of the same system.
In case that all was too long for you and you just skipped to the bottom... here is the short and sweet
DO NOT TRUST BACK TEST RESULTS
Way back in the day when I still believed in the "Holy Grail" of trading system, I spent a fair amount of time surfing the web searching for that special system that would make me wealthy beyond my wildest dreams. I specifically remember coming across on EA in particular that when back tested seemed to turn mere pennies in to thousands of dollars. Now lucky for me, I was wise enough to test it on a small live account and quickly found this to be too good to be true.
Fast forward to today, know more than I did than, (hopefully ) I went back and found that system I back tested. Know that when I first tested it I most likely did not spend the time to optimize the test results and use the most accurate data (back then my computer was very slow and would take literally hours to run one test). Now thanks to modern technology, I present to you two EXTREMELY different views of the same system.
In case that all was too long for you and you just skipped to the bottom... here is the short and sweet
DO NOT TRUST BACK TEST RESULTS