Backtesting FoundationsWhy Small Samples Lie to YouWhen you test a new idea on only a handful of trades, the results are dominated by random

Backtesting FoundationsWhy Small Samples Lie to YouWhen you test a new idea on only a handful of trades, the results are dominated by random luck rather than a repeatable edge. A few lucky winners can make the performance look spectacular, but the same pattern will usually crumble when you apply it to new data. For novice traders, this illusion is a common trap because the early success feels like proof that the method works. The disciplined approach is to require a statistically meaningful number of trades before drawing any conclusions. In practice, many analysts use a rule of thumb that...