To The Moon

Find out more about me here: https://linktr.ee/keeleytan

Earlier this week, a friend of mine showed me his "proven" strategy. When I asked to see his backtested results, he sent me an excel sheet with 20 trades. He told me it’s working great so far. 

A few years ago, I was like him. I thought that trading in a live environment was the best way to learn. That mindset cost me over $10,000 and it nearly ended my trading career before it really began.

When I first started trading, I was confident in myself. I deposited $5,000 into a live account. I have no backtesting results to fall back on. My first few trades were winners. I felt like a genius. Then reality hits. I lost 12 trades in a row. I had no idea if my "strategy" actually had an edge. I FOMO’d into trades, used excessive risk, and basically gambled away my money.

The Hidden Danger of Skipping Backtesting

Think about building a house. Would you start building it without any blueprints? Would you invest your life savings into a building project without knowing if the foundation would hold? I would definitely not do so. Yet that's exactly what most of you do. You risk real money on strategies you’ve never properly tested.

The truth is, trading without backtesting is like driving blindfolded. You might get lucky for a while. And that one time, you'll crash. I learned this lesson the hard way after blowing multiple accounts.

Why Smart Traders Fall Into This Trap

Here's what makes skipping backtesting so dangerous. It feels like we're "learning by doing." We tell ourselves that real market experience is more valuable than historical testing. But this approach is actually destroying your trading in ways you don't realize.

I remember my early days of trading. Every loss felt personal. Every win felt like validation. I felt like I’m a professional every time I had a winning trade. I had no idea if my strategy actually worked because I'd never tested it properly. I was trading based on hope rather than statistical evidence.

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The Real Cost of Not Backtesting

The detrimental effect of skipping backtesting isn't just the money you lose. It's the psychological damage it causes. Without proper testing, you don’t develop true confidence in your strategy. Every loss will make you question your approach. Every win makes you overconfident which in turn causes you to overrisk in your next few trades.

Let me show you how this affected my trading. I would find a strategy online. Instead of testing it thoroughly, I will trade the new strategy with real money. If it worked for a few trades, I'd increase my position size. When it failed, I'd abandon it and search for another strategy or holy grail. This cycle repeated until I had no capital left. 

The Professional's Approach to Testing

After managing multiple six-figure funded accounts, here's what I've learned about proper backtesting.

Professional traders don't just test their strategies. They obsess over the data. They collect every single data points they can get hold of. They know their win rate, average reward-to-risk ratio, maximum drawdown, and optimal position sizing before risking their capital. If you need a journal, you can download here for FREE.

Think about professional athletes. They don't just show up on game day and hope for the best. They spend countless hours practicing, analyzing film, perfecting their technique, and have a mentor to take care of all the training programs. Trading requires the same level of preparation.

The Bridge Between Testing and Live Trading

Here's exactly how I transition from backtesting to live trading:

First, I complete at least 1,000 backtested trades. This gives me solid statistical evidence of my edge. But I don't jump straight to live trading after that.

Next comes forward testing. I trade 50 demo trades following my rules exactly. This helps identify any differences between historical and current market conditions.

Only then do I start live trading, but with minimal size, usually 0.25% risk per trade. I need 20 perfect executions (not necessarily winning trades, but perfect adherence to my rules) before increasing to 0.5% risk.

This systematic approach might seem slow, but consider this. Would you rather spend three months testing properly, or three years recovering from blown accounts like I did?

The Reality of Proper Backtesting

Here's what real strategy testing looks like.

You test at least 100 trades to get statistically significant results. You record every entry, exit, and reason for the trade. You analyze your maximum drawdown and losing streaks. You understand how your strategy performs in different market conditions

This might sound boring and time-consuming. But remember,  the time you spend testing is an investment in your trading future.

Building Your Testing Framework

After losing enough money through insufficient testing, I developed a system that works through my own system.

First, I test my strategy with at least 1,000 backtested trades. This gives me a true understanding of its performance.

Second, I analyze not just the winners, but the losses too. I also analyze potential psychological aspects of trading the strategy. I will analyze if I handle the drawdowns, am I comfortable with the win rate, and what will I do if I hit a certain amount of drawdowns? 

Last, I create my risk management rules based on the testing results that I analyzed. How much should I risk? When should I take a break if I see a string of losses?

The Transformation You Can Expect

When you finally embrace proper backtesting, your confidence increases naturally. Your decision-making improves dramatically, and your results become more consistent. Your stress levels also decrease significantly.

But the biggest change isn't in your trading, it's in your psychology. You stop hoping that your trades will work. You will start to trade with statistical confidence by understanding probabilities.

Creating Your Testing Process

The solution to better trading isn't finding the perfect strategy. It's testing your approach thoroughly before risking real money. Here's how to start.

Choose one strategy and commit to testing it properly. Don't move on until you have at least 100 backtested trades.

Record everything. Record your entries, exits, market conditions, your thought process, time, date, RR gained, and anything that you think is important.

Analyze your results to understand your strategy's true edge.

Making Time For Testing

"But Keeley, I work a full-time job. I don't have time for backtesting!"

I get it. I developed my testing framework while working 60-hour weeks as an auditor. Here's what worked for me.

I dedicated one hour every evening to testing. Instead of watching Netflix, I tested trades. In three months, I had analyzed over 1,000 trades.

Think about it this way: Every hour spent backtesting saves you countless hours of emotional stress and financial recovery from preventable losses.

The Path Forward

Remember the market doesn't reward guesswork. It rewards traders who understand their edge through proper testing.

Every successful trader I know has done extensive backtesting. They don't risk real money until they have statistical evidence their strategy works.

Want to learn how to backtest properly and develop real trading confidence? Subscribe to my newsletter where I share weekly insights about:

• Backtesting frameworks

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Don't let inadequate testing keep destroying your trading results. Join hundreds of traders who are transforming their approach through proper strategy validation.

The choice is yours. You can either continue gambling with untested strategies, or to build the foundation for real trading success through proper backtesting.

@MillionaireTiger @TigerStars @CaptainTiger