how long do you forward test an EA before trusting it with real money
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finished building and backtesting an ea that looks solid on history. backtested on 5 years of tick data, good results across different market conditions. now i'm forward testing on demo.
question: how long is a statistically meaningful forward test period? some people say 3 months, some say you need a full year. at what point is the forward test evidence actually useful?
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the answer isn't time, it's sample size. you need enough trades for the results to be statistically meaningful. a system that takes 2 trades per month needs much longer than one taking 20 per month. rule of thumb: 100 trades minimum before drawing conclusions. at 20 trades per month that's 5 months. at 4 trades per month that's 2 years. calculate your expected trade frequency and work backwards.
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and the forward test period should cover different market regimes, not just calendar time. if your ea was developed during a trending period, your forward test should include a ranging period. if the market hasn't delivered a regime change during your forward test, you haven't actually stress-tested it. knowing what regimes you've covered matters as much as knowing how many trades you've taken.
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small live account is much better. the execution on demo is usually perfect - instant fills, quoted spread. live accounts have real slippage, real spread widening on news, real partial fills on larger orders. an ea that looks great on demo often shows different characteristics on live due to execution friction. the difference is especially relevant for strategies that depend on tight entry timing.
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my process: run on demo first to catch coding errors, then switch to minimum lot on live as soon as i'm confident the code is correct. the ea costs maybe $50-100 to forward test on live at micro lots, which is cheap insurance against discovering on a full account that the live execution is materially different from demo.
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100 trades minimum across different regimes. live micro lots preferred over demo for execution quality data.
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