Forward testing
Running a strategy on live, unseen price data before committing real money to it.
Full explanation
Forward testing usually means trading the rules on a demo account, or at very small size, in real time. Unlike a backtest, you cannot see what happens next, so hesitation, spread and execution all become part of the result.
Run it long enough to collect a meaningful number of trades and to see at least one losing run. A fortnight of good conditions proves very little.
Compare forward results to the backtest. A large gap normally points to overfitting, unrealistic assumptions about fills, or rules that were never as clear as they looked.
Why traders watch it
It is the last checkpoint before real risk, and the only one that tests you as well as the strategy.
Trading considerations
- Trade the rules exactly, including the trades you dislike.
- Log every trade so the comparison with the backtest is honest.
- Scale in slowly once live rather than jumping to full size.
Educational guidance only — never a trading signal or recommendation.