The first thing you need to do if looking to backtest in MT4 or MT5 using a manual strategy such as price action or technical analysis is make sure your charts have enough history.

Install fastquant

This is easily fixed with the following steps. This will open a window showing the maximum bars allowed in the charts history. Expand this as shown in the image below;. This will bring up a list of Forex pairs and markets you have available. You can select the market and the time frame you want more history for. Once you have downloaded and set up your charts, the process of backtesting is easy once you know how. There are a few variations on how you can do it depending on what you are trying to achieve.

The hotkey you will need to know to manually backtest your strategy is F This is the key that is going to help you either go forward or back as you need. The first step to manually backtesting is finding the market or pair you first want to test your strategy. Once you have found the market, select your time frame and scroll back far enough in history to give you plenty of chances to test your strategy. To move the charts forward one candle at a time you can use the F12 hotkey. If you hold this key price will begin to roll forward.

If you hold F12 and Shift price will move backwards. As you move forward using F12 you can begin using your strategy to look for trade setups. Once you find a trade that meets your rules you can plot your entry, target levels and stop loss. You can then scroll forward to see how the trade works out quickly, rather than waiting like we have to in real market time. The best way to get the most out backtesting is with your trading journal. As you find, make and manage your trades you can keep a quick tally of how your trades are playing out, your stats and what you are picking up on.

Backtesting like this is super simple and can quickly help you place hundreds of trades. As soon as you find a trade you can use a horizontal line to mark your target and your stop loss. As you scroll forward it will become immediately clear whether the trade was a winner or a loser. You can write this in your journal and then move to the next trade. Whilst setting manual profit targets with a set and forget strategy is popular, you may choose to use this style of backtesting to work on many other strategies such as using breakeven, trailing your stop loss for more profits, using multiple profit target points, or even manually managing your trade as price moves.

The method I have just outlined to backtest is super easy and does not need any other addons. There are many other backtesters out there like Forex Tester 4 and there are also some interesting addons for MT4 to help with your backtesting. Whilst backtesting is important and can be incredibly helpful when you want to make a lot of trades in a short amount of time, it does not replace forward testing your trading strategy in real market conditions.

Nothing compares with having to wait for a trade to workout and having to stick to your rules in real-time.

Backtesting however, can help you quickly filter out strategies that simply do not work. It is also important that you test your strategy on multiple markets and time frames. Trader statistics have shown that some markets are more likely to be profitable than others and this can vary for you depending on how you trade and your method. Johnathon is a Forex and Futures trader with over ten years trading experience who also acts as a mentor and coach to thousands and has written for some of the biggest finance and trading sites in the world.

Most stretch Metatrader across their screens and then set up smaller charts for each monitor as they need.

It will reveal how your strategy will perform in various market conditions, and answer the most important question: is it profitable? However, have in mind that past results are not an indication of future performance.

Test your Expert Advisor on historical data

Your backtesting might show that your strategy would work in the past, but the market changes all the time and a strategy that was once profitable, could become unprofitable in the future. Contact Us Search Login. How to Backtest a Forex Trading Strategy. By Tyson Clayton.

November 20, Backtesting can be grouped into manual backtesting, and automated backtesting.

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Manual backtesting can be done by anyone, you just need the determination to go through a lot of historical data, but it usually pays off in the future. Tyson Clayton.

Publisher Name. About Tyson Clayton. Business leader, professional trader and trading mentor scratch the surface of describe Tyson Clayton, a Product Expert with Market Traders Institute. With over a decade of trading experience in the commodities and Forex markets, Tyson is a proven leader, instilling positive change and the ability to bring the best out of everyone. Related Articles.

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