Forex Backtesting


The broker is headquartered in New Zealand which explains why it has flown under the radar for a few years but it is a great broker that is now building a global following. The BlackBull s site is intuitive and easy to use, making it an ideal choice for beginners. I try to stay away from paid subscription models when it comes to backtesting because you won’t need to be doing a whole lot of backtesting. The idea of doing a successful backtest is that you gather a HUGE amount of data and can analyse this data without needing to go back and complete another backtest. There’s really not much to it and it’s extremely simple to use.

support and resistance

Seasonal trading can make an exceptional difference in your career as a trader no matter the currency, stock, or commodity. Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary. Charting tools help you analyze a market using the charts within a trading platform. Indeed, in this randomly selected example, we notice that our scheme is performing well. It is clear that our simple method is generating promising results on this first example.

By a trading strategy, you can know beforehand the profit probability, risks, and the right market conditions for the chosen strategy. Backtesting is absolutely crucial for your long-term trading success, especially if you are a beginner forex trader. It is only through backtesting one can learn the ins and outs of their strategy, find out which forex strategies are profitable, and eliminate those doomed to fail. And at the end of the day, nobody wants to be chasing shadows in the market. To help you understand how backtesting works, on this page, we’ll explain what you need to know before you define your forex strategy. We’ll also show you how to back-test forex trading strategies with five easy steps to follow.

Daftar isi

Benefits Of Backtesting

Projects offer a convenient way to manage your backtests and practice sessions. Lifetime support is only valuable if Forex Tester is well-established and stable. According to their website, they’ve been around since 2006. You need to decide if a track record of 15 years is something you can trust. You should not expect anything less from a dedicated trading simulator.

Backtesting a strategy with the strategy tester is essential before implementing it live on Automated Trading Systems. While backtesting uses actual historical data to test for fit or success, scenario analysis makes use of hypothetical data that simulates various possible outcomes. For instance, scenario analysis will simulate specific changes in the values of the portfolio’s securities or key factors that take place, such as a change in the interest rate. Traders should ensure that their backtesting software accounts for these costs. The ideal backtest chooses sample data from a relevant time period of a duration that reflects a variety of market conditions.

Furthermore, once you’ve thoroughly backtest a strategy and proven the strategy has the potential to be profitable it’s going to help give you the confidence to follow your rules. Manually backtesting a strategy will help you understand the strengths, weaknesses and characteristics of the strategy allowing you to better define it. Failing to learn to backtest your strategies is one of the main reasons new trader’s fail. There’s three primary ways to backtest a trading strategy. They can be a good way to start with backtesting, but I recommend upgrading as soon as you get some money.

Custom strategies with Metatrader

Like any other action in life, you would want to test your forex trading strategy in a demo mode before you apply it in the forex market. It will simply help you improve your future performance when trading CFDs and forex. This is when a trader keeps changing their strategy to find the largest profit based on the historical data, which can lead to hindsight bias. The viable strategy may be ruined because now it has become customised only for the exact conditions that were present during the backtesting period. In the future, if conditions are different, the strategy could perform poorly. We also offer an inbuilt backtesting tool that relates to trading patterns.


An equity curve is a graphical representation of the change in the value of a trading account over a time period. If in-sample and out-of-sample backtests yield similar results, then they are more likely to be proved valid. An important aspect of forward performance testing is to follow the system’s logic exactly; otherwise, it becomes difficult, if not impossible, to accurately evaluate this step of the process.

Wrapping Up: Do You Really Need Forex Tester 3?

Backtesting assesses the viability of a trading strategy or pricing model by discovering how it would have played out retrospectively using historical data. I’d like to mention quick that the odds of you learning to program and creating a successful trading algorithm are close to zero. I realize that algo trading and the idea of making money while you sleep or without any input sounds sexy, but it’s just simply not the case. Backtesting is the process of analyzing historical trade data to see how a trading strategy would have performed statistically in the past. The bottom line is that you want to prove that a trading strategy has an edge in as many different types of market conditions as possible, before you risk any cash. Now let’s look at a day trading strategy, where you take trades on the 5 minute chart.

  • The reason traders are glued to their trading screen is that markets are naturally deceivable.
  • However, you’re not able to track data or analyse your trades from the platform, so you’ll be needing to manually record all trades made, doubling the time needed to complete a full test.
  • Now, you obviously want to know how to backtest your trading strategy before you utilize it in live markets.
  • TradingViews’ paid version allows traders to go back to any point in the historical data and trade, candle by candle, up to present day.

Now that you understand automated and manual backtesting, it’s time to decide which one is best for you. In my experience, I believe that automated trading is only for a small portion of independent traders. I know of some trend methods that take a lot of small losses in ranging markets, but get super aggressive in trending markets and make all that money back…and more. If you tested the same trend following strategy during the time period in the blue box, you probably would have lost a lot of money. For now, just think of it as a way to have a reasonable level of confidence that a trading strategy will be profitable in the future.


It’s widely used, has a ton of documentation and you can download free code to speed up your learning process. If you want to do automated Forex trading, then I would start with MetaTrader 4. Then scroll your chart back to the beginning and start testing. You could use a piece of paper to track your trades, but a spreadsheet is better in the long run because you can perform complex calculations on your results.

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All values that are defined as variable parameters in the strategy, can be set here. Process all ticks with a different non recurrent price – applies tick skipping policy depending on price change. If Visual Mode is enabled, charts are opened for all selected instruments. This is where you set the variable values (as defined in the strategy code, e.g. instrument, slippage, amount etc.) that are used for the simulation.

Understanding Backtesting

If you find a way to make money while you sleep, you will work until you die. You need to know some Python to effectively use this software. The level is determined by a majority opinion of students who have reviewed this class. The teacher’s recommendation is shown until at least 5 student responses are collected.

Backtesting is a type of retrodiction, and a special type of cross-validation applied to previous time period. Automated backtesting requires backtesting software, which may be available for free on some platforms, but it can come with a cost. Automated backtesting requires clear rules that a computer can understand. This may require some coding knowledge or software that allows you to input the strategy criteria. ​​ is open 24-hours per day during the week, you need to be certain to only backtest during times of the day that you can actually trade.

Our price projection tool is designed to help traders spot the direction of price action by measuring historical performance for each trading pattern. Learn more about this in our section on useful trading tools​​. This is the report and chart generated by the strategy tester by MT4. As you can see, the strategy had an excellent run for a period and then suffered losses. The strategy means everything in the automated trading system.

Historic Data

Once we have everything set up, we will send you an email to confirm your subscription. Takes advantage of the most powerful and advanced ML-technique, which allows to perform parallel tree boosting to filter out inappropriate options as early as possible. It provides an even faster work than a Neural Network without loss of the result accuracy (up to 95%).

Many traders develop quick in and out strategies for scalping and day trading. Each second and each tick are valuable to those strategies. Automated trading systems can only match the speed and required by those traders.


Every trader should have a choice of which trading instrument to choose. The Graphic Panel is floating and can be moved freely to any place of your screen. Panel can be displayed horizontally and vertically, as well as you can close it anytime by clicking the X button.

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