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This is why forward testing is more important than backtesting. Backtesting only shows what the strategy CAN do but not necessarily what it WILL do.

I only use backtesting to figure out if the strategy is viable or not. Then I forward test it. You will then understand the weaknesses of the strategy.

Most likely one strategy will NOT work under every situation and as such will have a period of drawdowns. If the strategy drawdown is acceptable then you have a winning system.

Hope this helps.

If I had a dollar for every time someone asked me some version of “why don’t you just use tighter stop losses?” during a drawdown…

I REALLY REALLY dislike stop losses… they screw you 95% of the time, until the one time they save you from losing everything of course…

@ChrisPage, I agree using physical stops can be hit because tools now can allow stops to be hunted.

But what you can do is use programmable stops that allow the order to exit once past a certain level. Also you can use derivatives to hedge.

Using these techniques is what separates the amateurs from the professionals…lol

Hope this helps.