Keep backtest trades and live trades in separate journals

[Fairman]

Keep backtest trades and live trades in separate journals

A lot of traders log backtest results in the same journal as live trades, or at least in the same spreadsheet. It seems tidy, but it makes the numbers harder to trust.

Backtest trades are usually better than live ones. No emotions, perfect execution, no missed entries, no slippage unless you add it. If you mix them with live trades, your overall stats look better than your real trading.

They also answer different questions. Backtest results tell you whether the strategy has an edge on historical data. Live results tell you whether you can actually trade it. The gap between the two is one of the most useful things to know, and you can only see it clearly if they're separate.

What I'd do: one journal for backtests, one for live, and maybe a third for demo or forward testing if you do that. Use the same columns in each, so you can compare directly. Then once a month, compare average R, win rate, and number of trades per week across them.

If live results are far below backtest, look at execution, missed trades and rule breaks. If they're close, that's a good sign the strategy and your execution are both working.

The comparison is only useful if they're kept apart.

[Fairman]

Forward testing on demo sits between the two, so log it separately too. It has real time pressure and real spreads, but no money at risk, so it often looks better than live in a different way. Some traders find their demo results are close to backtest, but live results drop. That points at psychology rather than strategy or costs. Seeing three separate sets of numbers makes that kind of pattern much easier to spot. If demo and live are close but both trail the backtest, look at costs and fills before blaming yourself.

[Fairman]

Tag each backtest set with the date range and the rules version. If you change a rule and rerun the backtest, it's a new set. Mixing results from different rule versions in one backtest journal causes the same problem as mixing backtest and live. Keeping a simple version number in a column, and a short note of what changed, makes comparisons honest. It also makes it easy to go back to an older version if a change turns out worse. A version number in a column takes no time at all, and it saves a lot of confusion months later.

[FXS Prop Desk]

Backtest results are usually better, and mixing them with live results makes the overall performance look stronger than it really is.

Comparing the two side by side is useful. If live results are much worse than the backtest, the difference shows how much execution and psychology cost. That number is very helpful when deciding whether a strategy is worth trading.