subject: The Ins And Outs Of Bactesting A Fx Approach [print this page] One of the the distinguished advantages about Foreign currency trading is that you can back test your plan. Strategy backtesting is a very simple procedure when the Metatrader 4 is used as your trading platform. The Metatrader4 is one of the most excellent Forex trading platforms ever shaped and is readily available from any Foreign currency broker.
Backtesting may be easy but there are few rules you should follow. and the most significant of these rules is not to use data from a generic supply. All statistics must be obtained from your broker server. Regrettably most people ignore this and head straight to the Metatrader history download center where all data is in reality provided from third party servers. The data from third party servers differ very much from the one you can willingly have from your own broker server, thus your bactesting results are not reliable and should not be considered in determining the success of your Forex approach.
Obtaining data from your broker server is in fact very easy and readily available. All you have to do is keep your chart on the M1 time frame, once you have this access to that the other time frames are much easier to get when you for a short time switch your chart to the other longer time frames. This is a fact for the reason that there is so much information in the M1 time frame. The currency value changes more than 30 times per minute and as there are so many minutes per day you can visualize the size of data required to cover few months in the m1 time frame. Only a fifth of that sum of data is needed on the M5 period and so on for the other longer periods. So once you have the data for the shortest time frame the others time frames are very easy to compute by your trading platform if not already loaded by brief switching to the extended periods on your Currency charts.
Above and beyond having your Forex trading chart on the shortest time frame you should also scroll back your chart in the weekends as far as you can. Forex brokers leave their servers on for you most of the weekend and during those times the Forex market is typically closed for trading and the servers are not overloaded. The weekends are the most excellent times in the week to scroll your charts back to obtain as much data as you possibly can openly from your broker server so you can backtest you Forex plan.
Another rule you should go behind is that you stick to most recent times. Forex market changes its actions rapidly and not anything that worked years ago would work these days. so it makes no sense to get data for the earliest times. you should concentrate on the last few months only, in fact this makes things easier for you. Since it is nearly unachievable to get precise reliable data for all time frames for very old times. You should concentrate on receiving a full set of data for a particular Forex currency for few months back without interruptions all the way to the calendar day in which you do your back test.
The third and the closing rule I would like to talk about that you should keep in mind when it comes to backtesting Forex in Metatrader is this: Do not try to take a short cut. Lots of people who are novel to Forex trading perform backtest of failing Expert advisors within minutes and get winning results. Even if you use the most sturdy workstation a back test on Metatrader 4 would take few hours to ample, and that even without using the visual mode in which you could see the trades and the price movements on the chart. The speed of the movement in a simulation is highly reliant on your CPU memory and processing power. Metatrader Backtesting must always be done centred on every tick of market data or your back test is nothing but misleading. The more open trades overlap and a trailing stop is used the more is the processing needed by your CPU and thus the longer the time a back test would take. So why rush a good thing, Start your backtest properly and leave it to take its course while you are doing whatever thing you like to do, In the end of the test Metatrader 4 will hand you the full report that can look at and analyze, so you can then adjust your alternatives and go for the next backtest, and so on and on. Without end.
