False backtesting is a deceptive practice where trading strategy results are manipulated to show artificially high profitability and reliability. It’s commonly used by unethical educators, system sellers, and even some brokers to mislead traders into buying trading robots (EAs), signals, or enrolling in overpriced courses. While backtesting is a legitimate and powerful tool when done correctly, manipulated results can cause real-world financial damage.

In this article, we’ll uncover how false backtesting works, how to spot it, and how to protect yourself from being misled by fabricated performance claims.

What Is Backtesting?

Backtesting is the process of testing a trading strategy using historical market data to evaluate how it would have performed. Traders use it to:

• Assess the viability of a strategy
• Optimise indicators and entry/exit conditions
• Identify risk-reward ratios
• Validate strategies before applying them live

When done honestly, it provides valuable insight. When manipulated, it becomes a tool of deception.

What Is False Backtesting?

False backtesting involves manipulating historical data or the backtesting process to make a trading strategy appear profitable when it is not. This can be done intentionally or due to poor testing practices, but the end result is the same: a misleading representation of a strategy’s true potential.

It is most often used to sell a product, such as:

• Automated trading bots (EAs)
• Signal subscriptions
• Mentorship programmes
• Overhyped educational courses

How False Backtesting Is Done

1. Curve Fitting or Over-Optimisation

The strategy is fine-tuned to perfectly fit historical data, exploiting specific patterns that don’t hold in live markets. It performs well in the past but fails in real-time.

2. Selective Time Periods

Only the most favourable periods (e.g. trending markets) are shown. Losses during sideways or volatile markets are hidden.

3. Cherry-Picked Trades

Developers manually select only winning trades for the test results, excluding those that would reduce profitability.

4. Ignoring Real Market Conditions

The backtest doesn’t include slippage, spreads, commissions, or execution delays, leading to unrealistic profit projections.

5. Repainting Indicators

Some strategies use indicators that change values based on future data, meaning they look perfect in hindsight but are useless live.

6. Lack of Forward Testing

No walk-forward or out-of-sample testing is done to confirm the strategy’s robustness in unseen market conditions.

Why This Scam Is Dangerous

• Traders buy faulty systems expecting high returns and suffer real losses.
• False confidence leads to over-leveraging and emotional trading.
• Time and money are wasted on strategies that never had real merit.
• False educators build credibility on manipulated results, upselling expensive programmes and mentoring.

Red Flags to Watch For

• “99% win rate” or “No losses” in historical tests
• No drawdown or very small drawdown in the report
• No explanation of how the strategy works
• Lack of live trading results or forward testing
• Charts with hindsight bias (perfect entries and exits)
• No proof of trades on a verified platform like Myfxbook or FX Blue

How to Protect Yourself

1. Ask for Verified Results

Use platforms like Myfxbook or FX Blue to track real, live trading performance. Avoid strategies that only show MT4 backtest screenshots.

2. Demand Transparency

Real educators and system developers will explain their logic, including risk parameters, indicators used, and conditions for entry and exit.

3. Test Yourself on Demo

Before committing money, test any strategy or EA on a demo account in live market conditions. Watch for slippage, spread sensitivity, and actual behaviour.

4. Check for Walk-Forward Testing

Robust systems are validated using forward testing on unseen data to prove that they aren’t simply fit to the past.

5. Learn the Process Yourself

Understanding how backtesting works can help you spot manipulation. Traders MBA offers professional training that teaches not just how to backtest—but how to do it properly.

Conclusion

False backtesting is one of the most common ways new traders are misled and financially exploited. Glossy results and too-good-to-be-true charts are often built on bad data, poor methodology, or outright fraud. Protect yourself by verifying results, learning the process, and avoiding any strategy that refuses to show live proof.

To learn how to build, test, and validate real trading strategies with honesty and skill, explore the expert-led Traders MBA trading courses and take control of your trading future.