The useful question is not "is my strategy profitable?" It is "would this strategy have passed the specific rule set I am about to buy?" Those are different tests and only the second one matters.
Run the test against the rules, not against P&L
Fix risk at 0.5% per trade
Not variable, not conviction-weighted. The evaluation will not care about your conviction.
Simulate the daily loss limit
Go through the sample day by day. Any day that would have exceeded the limit ends the test — the account is gone at that point.
Simulate the static maximum loss
Track cumulative drawdown from the starting balance. Cross the limit and the test is over.
Only then check whether you reached the target
A strategy that reaches +12% but breached on day nine did not pass. It failed on day nine.
Sample size
Thirty trades is a minimum for a directional read and is not enough for confidence. A hundred is better. Fewer than thirty tells you about your recent luck rather than your edge.
The mistakes that make a backtest useless
- Ignoring spread and commission — they change marginal strategies from profitable to not.
- Variable position sizing, which lets one large winner hide a broken edge.
- Optimising parameters on the same data you are testing on.
- Excluding the losing period because "conditions were unusual." They will be unusual again.
Then test it live for $9.99
A pay-after-pass entry is the cheapest live sample you can buy.
Frequently asked questions
How many trades do I need to backtest before a prop firm challenge?
Thirty is the minimum for a directional read; a hundred is meaningfully better. Below thirty you are measuring recent luck rather than an edge.
How do I know if my strategy can pass a prop firm challenge?
Multiply your maximum consecutive losses by your risk per trade. If that exceeds the firm's maximum loss, the strategy cannot pass at that risk level regardless of long-run profitability.
FundedAxe evaluations and funded accounts are simulated. Traders do not trade real client capital; rewards are paid on simulated performance under the terms of the FundedAxe trader agreement.