If you’re not backtesting your strategies then how do you know that your choice of parameters is effective? The process of backtesting uses historical data to reconstruct possible trades in the past, using the rules defined in your chosen strategy. This testing allows you to improve and optimize your trading strategy before applying it to real-life trading situations. The premise is that if the strategy performed well in the past, it is likely to do so in the future as well, or if it did poorly in identifying past potential trading opportunities, you can see where you need to tweak the strategy.
However, to get the most accurate results from backtesting on MetaTrader 4, you will need to customize the backtest. There are a variety of inputs for which you can set amounts, such as tick size, fractional or round lot size, position sizing, exit rules, stop loss, slippage assumptions and so on. The idea is to set the parameter according to what you are likely to use in real-life trading.
While all this might sound really exciting and good for traders, what can be frustrating is that MT4 backtesting can take time. In fact, some custom indicators seem to take much more time than others, while the same backtest might take more time in one instance than it did in the past.
Different people might recommend different ways to speed up the backtesting process. Here are some things that have been found successful by most users:
Remember, backtesting a strategy or EA is important before applying it to your live account. So, even if it does take a little more time than you had anticipated, it will be well worth the time investment.
If you liked this educational article please consult our Risk Disclosure Notice before starting to trade. Trading leveraged products involves a high level of risk. You may lose more than your invested capital.
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