Real and Tester Trading

Understanding Real Trading

• Real trading refers to trading with actual money in the Forex market.
• In real trading, you experience all the factors such as slippage, spreads, and market volatility that you wouldn't encounter in a simulated environment.
• The results can vary significantly from those obtained in a strategy tester due to unpredictable market conditions.
• Traders exercise strategies, often involving risk management techniques, to maximize profitability while minimizing losses. 🤑

The Role of Tester Trading

• Tester trading is conducted in a simulated environment, often using historical data to execute trades as if they were live.
• Most traders utilize a strategy tester to assess the potential performance of their trading systems without financial risk.
• However, the testing may not accurately reflect real market conditions, particularly during high volatility situations.
• Discrepancies in results between tester trading and real trading often arise due to fixed spreads in backtesting environments that do not account for real-time fluctuations.

Limitations of Strategy Testers

• Strategy testers are plagued by limitations, such as reliance on historical data which is often incomplete.
• Results generated from strategy testers can be misleading; they may produce performance metrics that you cannot replicate in live trading situations.
• The fixed spread in strategy testers can lead to unrealistic expectations, creating a false sense of security about the profitability of a trading system.
• It's crucial to note that high-frequency strategies like scalping might not perform well under testing conditions compared to real trading scenarios.

Real Results vs. Tester Results

• Many traders express concerns regarding discrepancies between their backtesting results and actual trading outcomes.
• Real accounts often yield different results compared to a strategy tester, leading traders to question the effectiveness of their strategies.
• For example, the Expert Advisor may perform well in a strat tester but can fail to execute trades effectively in a live environment due to various factors like market dynamics and broker limitations.
• This highlights the importance of testing your trading strategy on a demo account before committing real funds. ⚠️

Testing Recommendations

• Before using a trading robot or strategy in live markets, it's recommended to perform thorough backtesting using multiple periods to evaluate performance consistency.
• Consider using a demo account first for testing; it allows you to gauge how the strategy performs under "real" conditions without financial repercussions.
• Adjust your expectations based on the performance of your strategy tester versus live trading, and be prepared for greater variability in live accounts.
• Most experienced traders suggest using the advice: "Trust real trading results, not just the backtest results!" 🧐