Backtesting Basics and Sample‑Size Discipline for Prop Firm Evaluations The Trap of Small Sample Sizes When you backtest a new edge on fewer

Backtesting Basics and Sample‑Size Discipline for Prop Firm Evaluations The Trap of Small Sample Sizes When you backtest a new edge on fewer than a few dozen trades, the results are dominated by random noise rather than a genuine advantage. A single lucky streak can inflate win rate, profit factor, or Sharpe ratio, giving you false confidence. This is especially risky in prop‑firm evaluations where the capital at stake is limited and the test period is short. In practice, many traders discover that a strategy that looked solid on 15 trades collapses once they hit the 30‑trade mark because the...