Why Backtesting Gives False Confidence is important for traders to understand. If your first question about a new trading strategy is, “What have the back test results been?” please listen in. We do have trading results since 2012 but….
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00:00 Intro 00:39 Backtesting Topic Setup 02:00 Perfect Backtesting 07:32 Where Backtesting is Helpful 08:32 Super Bull Verticals 09:10 Trader Success Blueprint 10:00 Market Timing 11:40 Don’t Depend on Past Results 13:10 Confidence based on best strategy 13:35 Proficiency in 3 areas 15:15 Position Sizing 16:47 Outro
“I am facing a major problem in my live trading performance in comparison to the results I am getting while backtesting the same trades.”
“It is really throwing off my confidence that I will not be able to reach even anywhere close to the performance of the hundreds of back test trades I’ve done.”
Do these statements sound familiar?
Doing hundreds of back tests on a strategy may sometimes be useful, but the results of those back tests in isolation should never be the source of your confidence in future trading results.
The presumption behind the formation of the thought “I can be confident that I will make money in this strategy because it had good back testing results” is a normal tendency.
However, it’s also poison.
And it’s going to prevent you from progressing as a trader.
Be sure to listen and adjust your trading mindset if necessary.
We know you will enjoy this insightful podcast where we discuss the many aspects of trading and what it takes to remain profitable over a lifetime. Even more importantly, listen up and discover what not to do as we reveal common mistakes you must avoid in order to be successful in the world of trading.
We would love to hear your feedback so be sure to ask questions and comment on the video.