A common mistake students make when backtesting is allowing the future to inform the past.
When you reach a point in the chart, you have to mentally exist at that exact moment in time. You cannot use what happens later to change how you interpret what was happening then.
Backtesting must follow the rules and protocols of your strategy. Don’t cherry pick setups, don’t use future price action to justify a decision, and don’t give yourself information you wouldn’t have had in real time.
If you make decisions in backtesting that you wouldn’t make live, you create negative reinforcement. You start believing you’ve cracked the concept, when in reality, you’ve trained yourself to see what you wanted to see rather than what the market actually presented.
NB: When backtesting, only use the information that was available in that moment.
