Backtest vs PAPER Trading
A backtest asks how rules would have behaved on historical data. A forward PAPER test asks what the frozen system does as new data arrives. They answer different questions.
Why a backtest can look better
Repeated optimization can fit noise in historical data. Data leakage, unrealistic fills, omitted fees and selecting only successful variants can also inflate apparent performance.
What forward PAPER adds
The future sequence is unknown when the version starts. That makes forward observation useful for detecting regime sensitivity, operational failures and behavior that was hidden by historical optimization.
What each evidence stage can answer
Passing one stage is permission to investigate the next stage—not proof that the next stage will work.
PAPER still has limitations
PAPER execution is simulated. Real slippage, liquidity, latency and exchange constraints can differ, so PAPER profitability should not be presented as live-money profitability.
Our evidence ladder
Each stage can answer additional questions, but success at one stage does not guarantee success at the next.