CFTC and nfa rules require the standard language whenever a commodity-trading-advisor, pool operator or broker presents results that were not achieved with real money. The core admission is that hypothetical trading involves no financial risk and that no simulation can account for the effect of real execution and the psychology of live losses.
Related requirements police how any performance is shown: composites must include all accounts traded similarly, rates of return follow prescribed computation, and cherry-picked account histories are a straightforward violation.
On the securities side the adviser marketing rule under the investment-advisers-act-1940 restricts hypothetical performance to audiences with the resources to evaluate it, and generally bars it in mass-market advertising. Any strategy sold to the public on backtest alone should be read with this in mind.
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