Why is an EA profitable in backtests but blows the account in a real account?

[shanmugapradeep]

Hello,


There are several EAs in the market claiming to be profitable by showing backtest data. I have tried tons of free and paid EAs with amazing backtest results. In backtests, these EAs show impressive returns and very low drawdowns, even over several years of historical data.


However, when the same EAs are applied to a real account with the same settings, the results are completely different—they blow the account within a day, a week, or at most, a month.


Are backtest data unreliable or not legitimate?

 

[Thaddeus Finch]

Hello,


There are several EAs in the market claiming to be profitable by showing backtest data. I have tried tons of free and paid EAs with amazing backtest results. In backtests, these EAs show impressive returns and very low drawdowns, even over several years of historical data.


However, when the same EAs are applied to a real account with the same settings, the results are completely different—they blow the account within a day, a week, or at most, a month.


Are backtest data unreliable or not legitimate?

Backtest data is often misleading because EAs are optimized for past conditions but fail in live markets due to slippage, spread, and execution issues. Many rely on curve-fitting, making them unreliable. If an EA consistently fails in real trading, its backtest results are irrelevant or manipulated. Manual trading with proper risk management is a safer choice.

 

[Faillims43]

Backtests use historical data and assume perfect execution, ignoring real-world factors like slippage, latency, and volatile spreads. Live trading exposes these flaws, causing unexpected losses.

 

[diyforexskills]

Yes, backtests can be misleading. The only time I rely on a backtest of an optimised strategy is after I have backtested that same strategy on numerous (10+) pairs because most pairs have vastly different price action. So if the one strategy can deal with all these different price dynamics, the chance of it performing profitably going forward on the pair I developed the strategy for, is much enhanced.
I also don't use so called "perfect" tick data for backtesting. I use the data from the live account that I trade with, warts and all since that is the type of tick data used for trading. Why use "perfect" data when we trade on imperfect data with whichever broker we use.

 

[Thaddeus Finch]

Because backtests have perfect conditions, no surprises. Real trading is messy, with slippage, delays, and wild markets that the EA wasn’t ready for.

 

[Mr.River]

all the answers are correct but also there is another factor, if the EA works based on lagging data, like some indicators, that will work perfect on historical data (well because its not lagging in historical data) but in real market the situation is live!

 

[diyforexskills]

Backtests are essential for me because I use my own multifunctional/programmable EA to develop strategies; ie not commercial "blackbox" EAs.
So I develop, optimise and backtest as I outlined in my first Post on Monday. ie backtesting on multiple 2 year Out of Sample data sets.
With that approach both my portfolios on demo and on live are performing as per expected from backtests; but only 2.5 months and 1 month respectively so far so still only indicative. But the demo did survive the aftermath of the Liberation Day tariff antics of DJT! So that is a plus.

 

[rmufti68]

Because backtests have perfect conditions, no surprises. Real trading is messy, with slippage, delays, and wild markets that the EA wasn’t ready for.

Agreed and there are mostly of them which requires monitoring during the high volatile markets because they are coded to follow the technical analysis in my opinion.

 

[Thaddeus Finch]

Agreed and there are mostly of them which requires monitoring during the high volatile markets because they are coded to follow the technical analysis in my opinion.

You're right. Many EAs perform well in theory, but without proper risk controls, they struggle under real market volatility.