Wicks hide the order in which things happened

[Amanhasnoname]

A candle with a long upper wick and a close near the low tells a story. Price pushed up, got rejected, fell back. But the candle doesn't show whether the high came before the low, and that order can change everything.

For a scalper with a stop and a target both inside the candle's range, the question is which was hit first. Backtests on candle data have to guess, and the guess often favours the strategy.

Many testing engines assume the worst case, or the best case, or use an arbitrary rule. The result is a trade that wins in the test and loses in reality, or the reverse.

This is one of the main reasons candle-based backtests of tight scalping strategies are unreliable. When target and stop are small relative to the bar, the order of events dominates the outcome.

Tick data fixes it, because the sequence is preserved. Without it, results on tight-target systems should be treated as rough estimates at best.

This is also why a trade that is stopped out and would have hit the target in the same candle is so common in testing. The tester has to choose, and different engines choose differently, which means two honest backtests can disagree by a wide margin.

Have you compared the same strategy on candle data and on tick data?