I actually thought about trading a similar short system. But the challenge is you never know if a stock is shortable. And, I've found it doesn't help lower the max DD.
The only thing I've found that I trust on EOD data is the closing price. That's the only thing you can trust (1) is accurate and (2) that you can actually hit. Having said that, since you have a great backtest and your paper trading is matching the backtested results, I would say just dive in and devote a small account to actually trying out the strategy realtime. But, it's important to compare your actual entries/exits with your parallel theoretical entries/exits to see if real life can truly match theory. If your actual results are significantly less than theoretical, then you can reevaluate your strategy or your execution. If, on the other hand, your strategy succeeds, you're profitable, and your real results don't deviate too far from theoretical, then increase your bets weekly based on how much total profits you've accumulated. If the equity curve is as smooth as the graphic you posted, then you should be making $100k bets in no time. Devoting 20% of your account to each bet sounds a little on the risky side, but the smoothness of your equity curve should dictate how much capital you should commit to each bet. I don't go above 10% of my account on any single stock, but I also will get into upwards of 30 stocks at once, so I can still easily max out my overnight margin and, consequently, my return on capital. I initially tested my own system realtime with $2k bets. Within 2 yrs I had increased my bets to $100k and still manage to match the theoretical results. I've kept that amount level for about 6 mos, but now I'm considering going up to $200k/bet for the more liquid stocks. Good luck!