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Trader awareness card 31 / 32
The Rearward Mirror
A Cautionary Tale of Blind Backtesting
Card meaning
A mirror reflects only the road behind, leaving the turns and obstacles ahead unseen. It is like how beautiful backtest results do not guarantee future performance, especially when market conditions change.
“The mirror that shows only the past will blind you to the present.”
Signs to notice
- Over-fitting strategies to old data
- Believing “it worked for 10 years” means it will keep working
- Ignoring regime changes
- Curve-fitted confidence
Lessons to learn
- Backtests are hypotheses, not proof.
- Markets evolve. Edges decay.
- Forward testing and robustness matter more.
- Stay humble before history.
Glance backward. Walk forward with open eyes.
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