A grid backtest can look smooth for months, then lose a large part of the account in one strong trend. The curve alone does not tell you which kind of system you are looking at. These five checks help you find out before you risk real money.
1. Look at equity, not only balance
A grid keeps losing trades open, so balance can keep rising while floating loss grows. Compare the equity curve with the balance curve, and read the maximum equity drawdown.
2. Test more than one market period
A calm period can hide the weakness of a grid. Include strong trends and news spikes, and test at least two separate periods. If one period is much worse, find out why.
3. Use real ticks and realistic costs
Grid and trailing logic react to small price moves. Use real ticks when you can, along with your own broker's spread and commission. A lower-quality test can show results you will not get in live trading.
4. Test with the deposit you will really use
Results on a large deposit can hide margin problems. Run the test with your real deposit and lot size, then search the journal for "not enough money". Several pending orders can fill close together and use up free margin quickly.
5. Compare average win, average loss and largest loss
A high win rate can hide large losses. Check how big an average loss is against an average win, and look at the largest losing trade. A profit factor close to 1 leaves little room for live trading costs.
One more habit
Change one setting at a time and run the test again. If a small change makes the result collapse, the result may only fit the past.
After these checks, run the system on a demo account before using real money. Past results do not guarantee future results, and grid trading can lose money quickly in a strong trend.
