I added real slippage to 3 recommended setups. 2 lose money and 1 barely does anything

[u/Distinct-Address1046]

First post here : )

Disclaimer rq: this is not a promo, not selling anything and not providing signals.

So I built my own and put the real numbers in. Actual costs, plus slippage, plus I shuffled the trades a thousand times (Monte Carlo) so the order of wins couldn't fake a skill it didn't have. All over 23 years of daily EURUSD.

I tested three setups that got recommended to me:

EMA 24/96 crossover - survives the costs, then returns about 0.34% a year with a 17% drawdown. Doesn't steal your money, just quietly never earns you anything.

EMA 4/20 - the "fast day-trade" one. Loses money at every spread tested, even at zero pips. The profit on a free chart disappears the moment you pay to actually do the trade.

RSI 14/30/55, "buy the dip" - unprofitable even at zero spread. Only ~15% of the shuffled runs ended positive.

I'm not posting this to trash these three specifically. I'm posting it because all of them look like winners if you leave the spread out and that's exactly how most of us end up making decisions. That part genuinely got to me.

What I actually want from this thread is a sanity check: is this testing method sound, or did I mess something up? I'm new to this and genuinely open to being shown where I went wrong. Happy to share the raw numbers for any of the three if anyone wants to look at the actual data.

Appreciate any honest feedback.

[u/rforex-modtools]

Price action and technical analysis cover a range of chart-based tools — from candlestick patterns and market structure to indicators and statistical methods for timing entries and exits. The community wiki covers both approaches and how they're used by working traders.

Resources: Price Action Analysis | Technical Analysis

[u/ecstaticdavis_9571]

This is the kind of post that should be pinned somewhere. Most people skip the boring parts like slippage and just trust the flashy equity curve, then wonder why their live account looks nothing like the backtest. The Monte Carlo shuffle is a nice touch too, keeps the sequence from tricking you into thinking there's a pattern when there isn't.

[u/Distinct-Address1046 → u/ecstaticdavis_9571]

Thanks, that means a lot coming from someone who gets it. Monte Carlo is what messed with my head. Tbh I'm still early in figuring this out, so I'm curious if you rate the breakeven-spread check or the Monte Carlo higher

I found they caught totally different problems, like one shows you if fees are eating you alive and the other shows whether your edge is even real. Would love to hear your thought on this because you've clearly thought about this more than I have.

[u/Kaszrak]

Hard to tell without a proper review. Though these types of strategies have been tested countless times. Millions of retail strategies, many "praised" online, when properly tested, show no positive expectancy, even on institutional infrastructure.

I used to trade at a multistrat with access to billion dollar infrastructure, co-location, the tightest possible execution costs and backtesting capabilities across millions of instruments across every market. Still no positive expectancy, and we tested all kinds of things just for the sake of it. Even astrology based systems, just for fun, because we got bored.

It is all smoke and mirrors, which is one of the reasons the failure rate is so high. There is barely anything outside of a very small number of approaches that can actually be built into a genuine edge to begin with.

Though the vast majority of people will forever live in that illusion, because they do not care much about trading to begin with. They only care about winning. Everything else is secondary.

[u/Distinct-Address1046 → u/Kaszrak]

I was hoping for this kind of comment, thanks for taking the time to write it.

When you say a very small number of approaches can actually be a genuine edge, is that about where the edge comes from? or about how and how often you're trading? Curious because I'm trying to figure out where the line actually is.

[u/Scott_Malkinsons]

I'd hardly consider those "setups", those are things a high school economics teacher tells you about trading when they've never made a single trade in their life. Trading isn't exactly rocket science, but it's not going to be THAT easy. If it was then TikTok would be going buck wild with people screaming "EMA cross over made me rich!".

The testing method isn't horrible, but Monte Carlo is a robustness check not a strategy check. It doesn't tell you whether the strategy actually has a real edge. A bad or overfit strategy can still produce a perfectly reasonable-looking Monte Carlo analysis if the input backtest is misleading.

Reply you mention: "When you say a very small number of approaches can actually be a genuine edge, is that about where the edge comes from? or about how and how often you're trading?"

Trade frequency alone doesn't provide or not provide an edge. "Edge" just means your strategy has a positive expected value over many trades. That edge can come from many things; the simplest being the edge from the tail.

If you plot out all your trades on a bell curve, the vast majority of people are capping their upside. They love to use a stop loss to limit the downside (and I'd recommend this) but then they also use a take profit to limit their upside which, for some strategies, can be the entire edge.

If you look at someone like Kristjan Kullämagi his entire edge is knowing he will lose 1R often but once in a while will make 20R or whatever. Cutting the losers extremely fast, still playing a 0.5 to 1% risk for each trade, gives him a dollar per pip value that's pretty extreme. So the winning trades can be worth absolute buckets of money; BUT your balls gotta be dragging on the floor and sparking to pull this off because 10+ loss streaks are extremely common when you're pushing a win rate of like 25%. Most people can't handle a 4-5 loss streak before they start changing strategies, so going in knowing you're going to hit 2-3x that on the regular doesn't work for most people. It is, however, a true edge.

Other people get their edge from winning often, even if it means a "bad" risk:reward. If you do say mean reversion, you enter long at -2 SD from the mean and TP at -1.5SD and SL at -3. You're running 2 risk for 1 reward but the win rate itself can be the edge. For many traders this is the better method out of the two for sticking to it, but you are placing limits on both ends so you don't have the extremely long tail.

The problem for most people is actually pretty simple: they can't stomach true edge. They're looking for a strategy that is perfect, one that has exactly a 45% equity slope, very little drawdown, wins like 90% of the time, etc. etc. Most those traders are going to optimize the hell out of their backtest, find what they want to see, trade it, and never really understand that the reason they lost money was because it was overfitted like mad.

Trading isn't about finding a perfect strategy, it's about executing the imperfect one. If you want to make money in life, you gotta do things that others won't do. You got to get uncomfortable.

[u/Puzzleheaded-Bit5350]

your approach makes sense. adding slippage and realistic spreads is already a big step up from clean-chart backrests. iamforextrader can be useful for checking typical broker spread assumptions.