Ignoring transaction costs can make a strategy look more profitable than it is, especially when targets are small. A useful test should reflect realistic execution as closely as possible.
How do you account for spread, commission, and slippage in your results?
Yes, absolutely! Spread, commission, and slippage should always be included in your backtesting. Ignoring transaction costs gives a false sense of security, especially for short-term or scalping strategies where small targets can easily be wiped out by fees.
In prop firm trading, failing to account for these costs can quickly threaten your daily loss limits and drawdown buffers. A backtest that looks great on paper can fail in live markets if execution friction eats up your edge.
Always add realistic commission and spread settings to your platform.
Account for slippage during high-impact news events or volatile market opens.
How do you typically estimate your slippage during backtesting? Let us know below!
