Strategy and performance
Forward testing
Running a strategy on live data it has never seen, in real time. It is the honest test a backtest cannot be, because the results are produced by data that could not have been fitted.
Also called: Paper trading · Out-of-sample testing
GFN’s figure
Forward testing costs nothing but time on a GFN account, because no programme has a deadline - Instant, the 1 Step and the 2 Step all run at your own pace.
In detail
Forward testing,explained
Forward testing also surfaces the practical problems a backtest hides: whether the setups are identifiable in real time, whether the orders fill, and whether the trader can actually follow the rules.
A sample large enough to be meaningful takes months. That is inconvenient, and it is cheaper than discovering the same information on a paid evaluation.
Related
Terms thatcome with it
Most rules only make sense next to the ones they interact with. These are the entries this one depends on.
Backtesting
Running a strategy over historical data to estimate how it would have performed. Useful for rejecting ideas, weak as evidence for accepting them, because the result is fitted to data already seen.
Demo account
A practice account with no assessment, no rules and no payout. It exists to learn an interface or test a strategy, and nothing that happens on it qualifies you for anything.
Trade journal
A record of every trade with its reasoning, size, levels and result. It is the only way to find out whether a strategy is being followed, as distinct from whether it is working.
Time limit
A deadline by which an evaluation must be completed. Where one exists it changes the strategy entirely, because it converts a test of process into a test of process under a clock.
Expectancy
The average result of a trade over a large sample, combining win rate and average win and loss. A positive expectancy is necessary for a strategy to work and not sufficient for it to pass an evaluation.
Ready when you are
Your capital stays yours.The risk is ours.
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