There is a place for back testing. It has limits to it's effectiveness. Back Testing is like trying
to look at the past and predict the future. Looking at the pasts can be helpful in learning
how to use indicators.
A trader should not expect the market to do the same thing over and over for years.
If you look at a weekly chart you will see periods of time where the market was in a
channel and going sideways. Then it moves in a direction for thousands of pips which
breaks the pattern and the ability to make any long term predictions.
Back testing is good for learning how to use an indicator but trying to predict the accuracy
of an indicator by using old history doesn't work very well because the market changes.
That is why we need the human decision making ability. The best way to test is in the
present going forward. it takes a little longer a few weeks but you can see what is
happing in the present.
Some traders spend too much time in the past and not enough time in the present.
By using indicators properly a trader can trade in the present, even using indicators
that are lagging indicators.
Take a look at the following video for more insight on back testing.