Forward Testing vs Backtesting, Which is Best!? 💎

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Forward Testing vs Backtesting. I'm going to approach this from a discretionary trader's perspective. Does backtesting really work? How do you perform a backtest? OK.

- Backtesting - looking at history
- Results can look amazing
- Danger of curve fitting
- You don't really know how the strategy will perform in the real world
- Forward testing can be done manually
- How do the rules perform live?
- Difference in results can indicate how robust system is

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[foxtrotbravo]

"Curve fitting". You are the first person online, who I follow, that has identified this issue with technical analysis and back testing. I watch people drawing lines on charts, picking points to match their beliefs, and it's like watching someone give answers from an Ouija board. Good video, from a long time lurker.

[jeroencommandeur]

I'm a pure algo trader and have build extensive simulators to test my strategies. Curve fitting is, indeed, -the- thing to watch out for. Another is to make sure you have strategies for different circumstances (bear/bull markets etc) and being able to switch between them accordingly. Plus you won't believe the amount of time testing actually takes. Well worth it though, as algo trading scales enormously. For me, scaling + psychological advantages are -the- reasons to choose algorithmic trading, really.

[runny]

As a systematic quantitive trading system developer, optimising by looking at past data (aka backtesting) is a OK, but be careful with overfitting. Forward testing (also known as walk forward testing) must be done with discipline, i.e your system must not use any data from the future. I now use rolling window optimisation and test that using walk forward test. This means I have a rolling look back period which I use for optimisation which I then apply on a walk-forward testing basis.

[jb_makesgames]

Very import yet very understood topic. You video spoke to some of the issues but you did not seem to reference any of the points listed on your whiteboard. Backtesting is most effective if your are trying to optimize your strategy after which you test in during forward testing. If your not optimizing then forward testing may be all you need, You also need to touch on the mechanics of forward testing, ie using simulated or real data.

[howtwodoit]

👌. Forward testing and collecting all that data is better than backtesting... You'll always try and tweak the backtesting.... Forwards testing👍. I recommend to do Forwad testing then, after a week of trading do the backtesting of that week and see if you executed properly.

[trolley]

backtesting is just a filter to make sure that the strategy works in principle, and maybe we practice a bit with it, and forward testing is the real thing.
Ofcourse, big data analysis of a strategy is a different story

[coletaylor]

about to hit year 3 and I think I have to walk away, financially. Can't get the pieces to fit together over time.

[AFter-instrumentals]

Hi I usto watch your videos when I first started, I turnt to trading as a place of self destruction during a hard time that lasted 2 years . I'm stopping for 6 months then only attempting prop firms. I can't trade at all at the moment I have a loosing mentality. 6 month of taking care of myself and looking after my money might help, if anyone is going through a mess just stop work on yourself and come back when your heads straight

[consciousmoviereviews]

I love your lessons per episode. As a special request, please slow down a little. Take some time to pause and do an overview of what you discussed. When you go so fast, I have to keep rewinding it at times and don't have time to process what you just said when you speed talk to the next point. Please keep your viewers' attention spans in mind and slow down a little so the concepts can be absorbed.

[ukspreadbetting]

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[MarketVVizard]

Hey i just joined the community but i cant log in 😶