[FX Course] The reason you can win in testing but not in practice

Hello, this is Leo.

When you trade, you may have experienced this kind of thing.

If this happens,

you start to doubt whether this method can really be used.

But I think it’s better to

confirm, before doubting the method itself,

to verify.

Testing and practice look similar but are very different

In historical testing, you can view the chart objectively.

Since the chart has already ended, money isn’t moving either.

So,

and you can judge relatively calmly.

But in practice,

and emotions come in.

This is the biggest difference between testing and practice.

In practice, “the rules subtly change”

For example, in testing,

This was the rule.

But in practice,

“It seems it’s about to break out soon”

and you enter before the high is new.

Even this alone makes it a different method from testing.

If take profit is sooner, the expectancy changes

In testing, you took profits at RR 1:2.

But in practice, when there is unrealized profit, you become afraid and take profits at around RR 1:0.7.

Meanwhile, stop losses stay at 1R as tested.

In this case,

This happens.

You might think, “In testing I win,”

but in reality, the take-profit rules may have changed.

The moment you shift the stop loss, you depart from testing results

Conversely, the same applies to the stop-loss side.

In testing,

“If the most recent low is breached, stop loss”

was the rule.

But in practice,

“If it seems to return after a little wait,”

you widen the stop loss.

Then,

This is the worst state.

You enter in testing, but skip in practice

This is also more common than you’d think.

In testing, all conditions are met.

But in practice,

and you pass on the trade you should have taken.

And when you pass, the trade then tends to move in your favor.

Then, your judgments further deteriorate.

This can happen.

Lot size changes can make the same method feel like a different thing

In testing, risk per trade is 1% of capital.

But in practice, you may risk 3% only when you feel confident.

After a loss, you may risk 5% to recover.

With this, even using the same method, the equity curve is completely different.

Check the testing-practice gap in five points

When performance in real trading worsens, I start with these five checks.

If these differ, it’s natural for testing results and real results to diverge.

Don’t compare results after only about 10 trials

One more thing to watch is the sample size.

For example, 1,000 historical tests with 60% win rate.

And 10 real trades with 30% win rate.

So,

“Not usable in practice”

cannot be concluded yet.

With around 10 trades, sampling bias is normal.

The easiest way to understand is to re-test on the same chart

If you lose in real trading, save that chart.

Then after the trade is over,

to verify.

Doing this reveals many mismatches.

These small differences, when accumulated, create large gaps.

What you truly need is a reusable method, not just a winning one

What I think is important when designing a method is,

under the same conditions, can you make the same judgment?

If you later look at the chart you can win.

But in real time you can’t judge.

That makes it hard to reproduce in practice.

Therefore, make the rules as clear as possible,

this makes it easier to reproduce.

Improvement sequence when performance is poor

In testing you win, but in practice you don’t.

In such cases, don’t abruptly rebuild the method,

If it were me, I would follow this order.