Question 1

Does a good backtest mean the strategy will work in the future?

Accepted Answer

No. A backtest describes how rules behaved on past data. It can show structure and a plausible edge, but it cannot promise that the future will look like the past. The honest read is a probability, not a guarantee.

Question 2

What is the single best thing to do after a backtest looks good?

Accepted Answer

Test the same rules on data the strategy has never seen, ideally going forward in real time. Forward testing on new data, on paper or small size, is the fairest check there is because that data did not exist when you built the rules.

Question 3

If the backtest is profitable, why not just go live?

Accepted Answer

Because a single profitable curve can come from luck, overfitting, or costs the test ignored. Live trading adds slippage, fees, and emotion. A sensible decision weighs the whole picture and the worst case, not just the final number.