Engineering Means Testing the System, Not Just the Strategy

A trading engine should be subjected to progressively more realistic testing before live deployment. Historical performance alone is not enough.

The Deployment Ladder

Why Historical Results Are Not a Promise

Backtesting can help examine historical behaviour, but assumptions around spreads, slippage, liquidity,

transaction costs, data quality and execution can materially affect results. Historical performance therefore provides evidence about past conditions; it does not establish future performance.

STAGE

Historical Testing

Simulation

Demo / Paper Environment

Controlled Deployment

Continuous Review

OBJECTIVE

Understand how the defined rules behaved against historical market data.

Validate software logic and operational behaviour without live orders.

Observe the system against live market conditions without committing live capital, where supported.

Introduce live execution with tightly defined limits and monitoring

Measure system behaviour, execution quality, errors and risk over time.

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