Forward Testing (Paper Trading)

Forward testing means running a trading strategy on live incoming prices without risking real money, usually on a demo account or in a platform simulator, to see whether backtest results survive real market conditions. Also called paper trading, it exposes factors a historical simulation tends to hide: variable spreads, requotes, slippage, weekend gaps, execution delays and the way news releases distort quotes. For automated systems it also verifies the plumbing — that the terminal stays connected, the code handles errors, and orders are actually accepted by the server. Its limits are real: demo servers often fill orders more generously than live ones, and because no money is at stake the trader's psychology remains untested.