Backtesting Failures 5 Mistakes That Sabotage Even Proven Trading Systems

Backtesting looks easy… until it isn’t. Most traders unknowingly sabotage their results with hidden mistakes in their backtests — and those mistakes can destroy real-money performance.

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In this video, I break down 5 critical backtesting mistakes traders make and how to avoid them. Whether you're a data-driven trader like Jason or a smart, financially independent thinker like Carol, this is essential knowledge if you're serious about growing your trading account the right way.

✅ What You'll Learn in This Video:

The #1 mistake most traders make that guarantees their backtest results are a lie (and how to catch it)

• Why using today’s ATR or close price in your entries is cheating

• How to correctly account for commissions and slippage in your backtests

• The danger of overfitting your strategy with too many rules

• How to optimize parameters without curve fitting

• Why system validation is the step that separates amateurs from real systematic traders

These aren’t minor tweaks — these are foundational backtesting principles that make or break your trading results.

If your equity curve looks too good to be true… it probably is.

📌 Chapters & Timestamps:

0:00 – Intro: Why Most Traders Mess Up Their Backtests
0:47 – Pitfall #1: Future Leaks (aka Cheating With Data You Can’t Use)
4:28 – Pitfall #2: Ignoring Commissions and Slippage
9:00 – Pitfall #3: Overfitting With Too Many Rules
12:40 – Pitfall #4: Over-optimizing Parameters
13:20 – Pitfall #5: Failing to Validate On Unseen Data


📘 Related Resources to Help You Build Better Systems:

Backtesting
– Learn the fundamentals and avoid false confidence.

Trading System Optimization
– How to improve your systems without overfitting.

Drawdown
– Understand how to handle real-world volatility.

Position sizing
– The overlooked piece that determines risk.

Risk Management
– Protect your capital through smarter strategy design.

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