Introduction

Backtesting is often the first step in developing a trading bot -- but it's not the final proof. There's a big difference between a strategy that performs well in historical simulations and one that thrives in live market conditions. Here's why real-time performance is the gold standard.

What Is Backtesting?

Backtesting uses historical market data to simulate how a trading strategy would have performed in the past. It helps developers: - Identify profitable patterns - Test entry/exit rules - Optimize risk settings - Spot weaknesses before going live

The Limitations of Backtesting

- Overfitting: Tweaking parameters too much can create a strategy that only works on past data - Slippage and spread changes aren't accounted for - News events, liquidity issues, and execution delays are missing from historical simulations - It assumes perfect conditions -- which don't exist in live markets

Why Live Testing Is the Real Proof

Live testing accounts for everything that backtests miss: - Real-time execution speed - Broker behavior (spreads, delays, downtime) - Unexpected market news and volatility - Actual drawdowns and trade slippage Only live results show how a bot handles real-world stress.

How Gemalgo Handles This

Before offering Gemalgo to clients, we ran over 2 years of live testing with our own capital. We track performance using MyFXBook, ensuring transparency. The results? - 65% annual return (2024) - Max drawdown under 14% - Verified, updated daily -- not a spreadsheet promise

Conclusion

Backtesting is important -- but not enough. Real-time performance under real pressure is what counts. Whether you're choosing a bot or building one, demand live results. At Gemalgo, we built trust by proving it -- not promising it.