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InfrastructureStocks7 min read

Your Data Decides Your Backtest

A strategy validated on one exchange's feed and run on the consolidated tape is two different strategies.

The gap that is easy to miss

Free market data tiers frequently supply a single exchange's quotes rather than the consolidated national best bid and offer. A single venue may represent a low single-digit percentage of total volume, so its quoted spread is wider, its depth thinner, and its high and low different from the market's.

Why this misleads specifically

A backtest on thin data produces plausible results that are simply about a different price series. The error does not announce itself — it shows up later as unexplained divergence between paper and live, which is usually attributed to the strategy.

The rule

Validate on the same feed you will trade on, and state the feed explicitly in the strategy's configuration rather than accepting a default. A parameter left unset is a decision made by somebody else.

Educational, not directive. This is analysis of how a market behaves, not a recommendation to act in it. Strategy detail with conviction scoring and live sample sizes lives in the vault.
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