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 profitable results by showing backtest data. I have tried numerous free and paid EAs with amazing backtest results. With these results, the EAs promise amazing returns and very low drawdowns; even with several years of backtest data, they show positive results.
However, when I applied the same EAs to a real account with the same settings, the results were drastically different. The account was blown in just a day, week, or at most, a month. Are backtest data unreliable or illegitimate?

 

[Fxzombie]

EA should not differ much in performance between backtest and real trading, I don't know exactly the cause; I just suspect the broker used is not transparent, or maybe the slippage factor can also affect performance in a live trading account.

 

[Jonathan Lee]

Yes, backtest data can often be unreliable or misleading. While they show idealized historical performance, they don’t account for real-time market conditions, slippage, or execution delays. Additionally, backtests can suffer from data mining or overfitting, where the strategy is too tailored to past data. It's crucial to test EAs on demo accounts or use forward testing to verify their effectiveness in live markets.