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How to Backtest an EA on MT4

How To Usually Backtest A Forex Expert Advisor To Make Sure It Works Properly?

how to backtest a forex expert advisor MT4 A few traders have asked how to backtest an EA on MT4 platform. It occurred to me that newbie traders would benefit from a quick how-to on using MT4’s handy Strategy Tester feature, so I decided to write a quick guide to help y’all get started. Before we begin, please ensure that you have read the articles on this website on How to Use Forex EAs. This should also help you understand the fundamentals of installing an EA. Forex traders must constantly improve and adjust their trading strategies in order to profit from buying and selling, and it is a good idea to learn from past experiences. This is the fundamental concept of backtesting, which is a method of estimating the performance of a strategy or an Expert Advisor as if it had been implemented in the past. This necessitates the use of detailed historical data of high quality. The strategy can then be executed on the financial instrument of your choice. Traders can use Metatrader to backtest an Expert Advisor to see if it is one of the best forex expert advisors.    

Backtesting Can Provide You With Information

Backtesting a Forex Expert Advisor allows a trader to see historical data in the chart, which includes:
  • Perfect Entries for the traders
  • Perfect and accurate Exits for the traders
  • The accurate time of the execution of the orders
  • Trades that were tested with the strategy
 

Why is it important to use a demo account in the beginning of testing?

It is best to backtest the expert advisors on a demo account because there is no guarantee that the performance will continue. If you like the performance after backtesting, only then should you try it on a live account. Remember that in forex trading, you must take risks and accept responsibility, so it is always best to be cautious.  

Backtesting on Metatrader 4

forex trading bot Select an Expert Advisor: To backtest, the first thing you should do is obtain an Expert Advisor. You can learn to code them yourself or purchase one from a reputable vendor. Open the Strategy Tester Panel: When the Expert Advisor is finished, click View and then select Strategy Tester. The Strategy Tester panel is opened as a result of this. The panel is located at the very bottom of the Metatrader platform. To backtest Forex Expert Advisors on Metatrader 4, you must first complete the following seven steps: Choose the Expert Advisor you want from the list labelled “Expert Advisor” in the field. Then, navigate to the “Symbol” field and select the financial symbol from there. You can backtest your strategy with a specific timeframe by selecting it from the “Period” field. Before you begin, remember to load historical data for your chosen symbol. You must now select the Model Value. There are three options depending on your requirements: Every tick: It enables a more accurate backtest. However, it is slow because Metatrader reads open, high, and low close prices from the historical dataset from the beginning to the end. As a result, random prices are generated within each candlestick. Only for a limited time: If your strategy is a medium-term one in which you are not concerned with movements within a single candlestick and do not require a reading of high and low prices, then it is a good parameter for running backtests. This is a quick method that is ideal for running multiple tests for optimization. Points of control: It is not a very good method because it is based on the nearest less timeframe. It is preferable not to use it. Choose the “Spread” option based on your broker fees. It is advisable to backtest with spreads that are twice as large as those required by the broker. Backtest in the worst-case scenario at all times. Avoid flagging the “Use date” field because it narrows the backtesting date range. It is more beneficial to run “Walk forward analysis” and avoid “Overfitting” when optimising. Because the backtest is being run for the first time, the “Optimisation” button must also be unchecked. It is preferable to optimise the strategy later. When everything is in order, click the “Start” button to begin the backtest.

Conclusion:

There are numerous variables that can influence an EA’s performance in live trading, so make sure to “stress test” them all before risking real money. Test it with a wide range of pairs and as much historical data as possible. Six months of data is insufficient for a valid test. The more thorough your testing, the more likely it is that your EA will perform well in live trading. Now it’s time to start testing.