Dyed in the Wool Backtesting and Chaos Theory – A Union Destined to Fail

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Dyed in the Wool Backtesting and Chaos Theory – A Union Destined to Fail

At one time in my trading career backtesting was all the rage. The premise was relatively simple; if something has worked in the past it is bound to work in the future. In short, all you need to do is adjust your backtesting parameters until you optimize a result that produces consistently profitable trades. Of course, most traders who utilize this trading methodology are often stunned (and I mean extremely stunned) when all the careful data analysis does not translate to profitable trading, especially if you are an e-mini scalper.

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