Common Pitfalls in Early-Stage Backtesting

Backtesting is a foundational research tool, yet it is also a frequent source of error. This article reviews common pitfalls encountered during early-stage research, including look-ahead bias, data leakage, and unrealistic assumptions.

We explain how these issues arise and why they often go unnoticed by new researchers. Practical guidance is provided on how to structure tests that reduce the likelihood of false confidence.

The emphasis is on awareness and methodology rather than correction after the fact.

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