Anthony Kenneth_ McDonald#71

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What is walk-forward testing and why is it used in forex system development?

Walk-forward testing divides historical data into segments—using one portion to optimize the system, then testing it on the next unseen segment. This process repeats, simulating how the system adapts over time. Benefits: realistic validation of robustness, reduced overfitting, and insight into performance stability across regimes. Institutions use walk-forward analysis to confirm whether strategies remain profitable as markets evolve. Retail traders can apply walk-forward by using demo or paper trading after backtesting, then periodically re-optimizing based on the latest data. Risks: too frequent adjustments may turn into disguised overfitting. Walk-forward testing acknowledges that markets are dynamic, and only adaptable systems endure.