The MT4 backtest is a tool that helps evaluate a specific strategy by applying it to historical market data. Backtesting MetaTrader 4 tells you if using that strategy for past price history has produced good results. If a system has worked well in the past, it can help you confidently apply that result in the present. This article will show you how to backtest a trading strategy on MT4.
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- Metatrader 4 app
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Table of Contents:
What is Backtest on MT4?
When you enter the market to trade, you must use a specific trading strategy to increase your profitable results. If you try these strategies now, it will cost you a lot of time and money to see if the results are working. However, on the MT4 trading platform, you can use the tool to test your trading strategy using a method known as backtesting.
With the MT4 backtest, you can test the effectiveness of your strategies by applying them to your price history. If the MT4 backtest works and produces profitable tissue, that is, if your trading strategy has worked well historically – then you can use it to trade with confidence. However, if the backtest results in a loss, the system may also fail in actual trading.
The popularity of the MT4 backtest indicates that, to some extent, this strategy works for traders.
Steps before testing a strategy on MT4?
Before you start testing a trading strategy, you need to make sure a few things.
First, you need to enable the Strategy Tester feature in MT4 by selecting the View menu and [Strategy Tester].
So you need to have the appropriate historical data for your particular trading symbol. MetaTrader 4 does not provide complete market data for every asset, which means that the backtest will not be accurate. You can manually download the data to your platform to fix it: go to the [Tools] menu and select [History Center]. Then select the transaction code, double-click the code name, and enter it into the system when the data is displayed.
How to test a trading strategy with MetaTrader 4 backtesting?
To backtest MetaTrader 4, do the following:
On the [View] tab in the upper-right corner of the screen, select the [Strategy Tester] feature.
Upload the trading strategy to [Expert Advisor] and click (Expert Properties) to set the parameters as you like.
- In the [Expert Properties] tab, on the [Test] tab, enter the amount for the initial trade, select the currency and order type [Long & Short] to allow both buying and selling.
- On the [Input] tab, set the EA or indicator (indicator) parameters that you want to test. Enter the desired value for any parameter in the Value column. If you intend to restore the default settings, click the [RESET] button.
- Then, choose the time interval and type of backtesting. There are 7 different time frames and three types of backtests: each check mark, checkpoints, or just open prices. Each tick is the most accurate method for all available times.
- You can choose the current (current) option on the Spread button or six different points (2, 5, 10, 30, 50 or 100 pips). For maximum accuracy, you need to choose the current option.
- Set a date range to test your strategy. Then press the Start button to start backtesting on MetaTrader 4.
The results will be displayed on the [Results] tab of the Tester window in seconds or minutes, depending on the time interval selected and the computing power of the calculator used.
View the results of the backtest run
When the backtest is complete, you can view the results. The graph below shows the results based on the [Everytick] backtest, which is 99%.
In addition, you can find a complete list of transactions generated during the test on the [Results] tab. To find errors in backtested strategies, see the [Journal] section. To start the trial version again, go to the [Settings] tab.
Conclusion
The above is how you backtest using MetaTrader 4. The results of backtesting on MetaTrader 4 will include the total amount used for trading, the amount of loss, the number of positions with profit/loss results… In doing so, you can get quite complete information about whether the strategy has worked in the past. This will help you decide whether to use that strategy in reality.
