Very common. It is to do with the shortcomings in the backtesting function – which shows that profits will always be achieved before loss is incurred.

In real trading the losses can (and often do) occur before any profit targets are achieved.

Hi @reihana9,

This is very common and may be caused by a number of reasons:

1. The backtesting software does not work correctly. PRT, as an example, does not support look-inside-bar testing. If a target and stop is hit within  the same bar, PRT will assume that the target was hit first; which is not necessarily the case.
2. You have not included spreads or commissions – or the correct spreads or commissions.
3. Your strategy is curve-fitted. It was optimized/over-optimized for the data it was tested on. Read up on walkforward backtesting and monte carlo simulations for ideas on how to avoid curve fitting.
4. The past is not a prediction of the future. Also, markets change. Try and test your strategy on different timeframes and different instruments/markets to see how robust the idea/strategy is.

PS: A lot of strategies on this forum aren’t of much use, as they are curve fitted and a lot of the time do not include any costs/commissions. A strategy that backtests well without costs, quickly becomes unprofitable if costs are added.

Hope this helps!

Regards

Stef