Question 1

Why do automated strategies often perform worse live than in a backtest?

Accepted Answer

A backtest assumes perfect, instant fills at the printed price. Live, you pay slippage, fees, and delays, and you can hit partial fills or outages. That gap is called execution risk, and it quietly drags real results below the simulation.

Question 2

What is a runaway order?

Accepted Answer

A runaway order is when a bug or bad state makes the code send orders it should not, like firing repeatedly in a loop or never stopping after a stop-loss. Because software executes faithfully and fast, a small logic flaw can place many unwanted orders before anyone notices.

Question 3

How does overfitting show up only after you go live?

Accepted Answer

An overfit strategy is tuned so tightly to past data that it captured noise instead of a repeatable pattern. It looks excellent on the history it was built from, then falls apart on new live data it has never seen, which is exactly when real money is at stake.