How accurate is back test? (For Past Result)

shanmugapradeep

Private, 1st Class
Messages
43
Hi,

Can anyone tell me how accurate is back test for past result (Not future result). I know bast performance do not guarantee future result.

So, here i am asking about a past result.

I made a back test for EA (Oct 2020) and the result is in negative but the developer of EA said me back test provide false result and for him October 2020 was profitable with same EA which given a negative result with back test.

Can anyone clear my doubt?
 

fxoday

Recruit
Messages
499
It does not guarantee a trading result for future, but still useful to backtest any strategy or robot trading, good trading in backtesting sometimes in real trading get fail, quality broker server and previous price is not always the same with future movement as reason any failure
 

shanmugapradeep

Private, 1st Class
Messages
43
It does not guarantee a trading result for future, but still useful to backtest any strategy or robot trading, good trading in backtesting sometimes in real trading get fail, quality broker server and previous price is not always the same with future movement as reason any failure
I know that mate. i am asking how accurate is back testing for even past result.
 

JayJones

Banned Spammer
Messages
324
Backtesting is accurate(if you use TradingView). If the EA fails backtest then don't even bother to try to use it on demo in real mode.
 

TareqS

Private, 1st Class
Messages
58
I do not see it would show a negative result without the indicator producing negative result in reality. It must have been negative in that month. Because back testing is market takes you back and move as it is moving now. It moves exactly what it did in the past. Thus, it must not produce two different types of result.
 
Messages
121
As you say it doesn't guarantee future results but it is pretty accurate in and of itself (it might be wise to test for a longer period of time, though). If your backtest showed losses but the developer claims it was profitable, that sounds a little fishy to me.
 

bigdolly

2nd Lieutenant
Messages
1,136
I know that mate. i am asking how accurate is back testing for even past result.
It's possible if you either used different historical data or counted transaction costs in different ways (like his backtesting results didn't take into account spreads, while yours did), however significant discrepancy is unlikely. There are no other known factors affecting backtesting.
 

perryjohn765

Private
Messages
193
back testings are accurate. yes it is helpful in knowing what the EA's had to say about it. they may be lying to grab the customers. Yes it is handy and helpful.
 

Pharaoh

Colonel
Messages
20,076
A backtest only shows how good an EA might be, not how good it will be. Backtests can ONLY show if it's worth risking a small amount of money on a forward test. Backtest data may not be perfect. Backtests don't have slippage and requotes. Market conditions can also change, turning a winning strategy into a losing one.
I suggest checking out this page for more information about how easy it is to mislead customers with a what looks like a great backtest:

https://www.forexpeacearmy.com/forex-books/203/fabricated-backtest-results-forex-scam
 
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