Why Backtests Differ From Live Trading | AlgoBars

Why your backtest does not match live trading

The short answer

Backtests usually beat live results for four reasons: they peek at future data, they fill orders at prices you could never get, they ignore real spreads and costs, or the strategy was fitted to past noise. AlgoBars tackles each one: no look-ahead, fills on the next bar, fill delay, worst-fill rules and spreads set per broker, and free walk-forward analysis to catch overfitting.

Last updated

The gap, and the fix

CauseHow AlgoBars handles it
Look-ahead biasA value never uses a later bar
Unrealistic fillsTrades fill on the next bar; fill delay and worst-fill rules per broker
Spreads and costsBroker-true spreads and real market limits
OverfittingFree walk-forward analysis and Monte Carlo simulation

Good to know

Trading involves significant risk of loss. Nothing here is financial advice.

Next steps

Frequently asked questions

Why is my live trading worse than my backtest?

Usually look-ahead, unrealistic fills, missing costs or overfitting.

How do I make backtests realistic?

Use next-bar fills, broker-true costs and walk-forward testing.

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