#CurrencyPairPrediction Backtesting and Forward-Testing Model Predictions Backtesting and forward-testing are essential steps in evaluating the performance of predictive models in trading: Backtesting: Involves applying a model to historical data to assess how it would have performed in the past. It helps identify potential profitability, risk, and weaknesses but can suffer from overfitting or look-ahead bias if not done carefully. Forward-Testing (Paper Trading): Tests the model in real or simulated live environments using unseen future data. This step validates whether the model’s performance holds in real-time conditions, accounting for market dynamics and execution constraints. Together, backtesting provides initial validation, while forward-testing confirms real-world robustness and generalization ability, making both crucial for reliable model deployment.