Candlesticks were created based of trades done on a specific timerange. Therefore, when we are doing backtest using candlestick data, we are looking at what others already did in the past and imagine what would happen if we do some things at some specific times/moments. But whatever we do in backtest, there won’t be any other party that can respond to it.
Same thing with dry-run. While we are using live data for our decision, whatever we do with it aren’t executed on live market, hence no one know what we were doing, and they won’t respond to it.
This is one of important thing that might cause difference between your backtest/dry run versus a live trading. Imagine you are playing a hunter game. You are the hunter, and all other people around you are the hunted. You are walking with this imaginary gun in your hand. When you “shoot” (in your mind) a random person, would other people around you react? No. They would do their things like nothing happened because they are fully unaware of whatever you are doing in your mind, and you can easily “shoot” people number 2, 3, 4 and so on.
But what if you are really holding a real gun, and firing a real bullet? Those people would scatter after your first shot, and you will have harder time to kill people number 2, 3 and so on, assuming those people doesn’t turn around and kill you first instead.
Most of the time, our strategies are focused on reacting on how others trade (we become the hunter). We forget that if we are involved in a situation where our own trade can influence the market (for example trading very low marketcap pair), suddenly we become the hunted. Your strategy that works perfectly if it’s the hunter, fails completely because it never trained to be the hunted.
This isn’t exclusive on low marketcap pairs only. Even if you are only trading BTC, if your stake is big enough to be able to influence the market (even just a little), whales would notice your presence and you might become their target. And that’s why running a dry-run for (relatively) long time still don’t guarantee any live trading profit. Nor does running live with (relatively) small stakes, if you intends to increase the stakes later on.
[…] The hunter and the hunted […]