One of the advantages of MetaTrader 4 also known as MT4 platform is that it gives traders an opportunity to test any expert advisor (EA) using previous market price movements before using it in live trading. This kind of testing is referred to as a Backtest. If you want to know if your Expert Advisor or MT4 Indicator works, then backtesting is a good indication on how your strategy will perform in the future…although you must understand that future performance may not be the same as past performance. We post this simple instructions on how to backtest on MT4 so that you can test all your EAs and Indicators before going live.
Below are the steps followed in carrying out a Backtest:
- Open the tester window
The tester window is the multifunctional window where the traders tests their EAs and it opens at the bottom of the trading chart. There are three ways in which you can open the tester window:
- Go to the main menu, click view and then click strategy tester,
- Click on the strategy tester button in the standard toolbar,
- You can also choose to press CTRL+P.
Once you open the tester window, you will notice that it has a variety of tabs with some being visible only after loading an expert advisor. Immediately you open the tester window the only tabs that are visible are the settings and the journal tabs.
When you load an EA, the results, graph, report, optimization results and optimization graph appear following certain actions like after testing an expert advisor.
- Set up the testing parameters
You will have to set all the necessary parameters before testing your EA. Simply click on the settings tab in the tester window. The parameters that are to be set here include:
- Expert advisor
- Expert properties
Click on the expert properties for each of the three tabs: optimization, testing and input. The three tabs are used for optimizing (setting limits) the testing process. You can choose to enable them by checking their boxes or choose to disable the optimization by not checking their boxes. You can use your setting here to test. And we use our best settings for this test.
- Symbol and period
Click on the symbols and period to select the symbol and timeframe that you want to use when testing your EA.since backtesting uses previous market movements the tester will have to download and save historical data for the selected symbol and timeframe.
Click on the model button and choose one of the three models ( open price only, control points and every tick). We suggest using Open Price Only for faster results. If you want more accuracy, you can use every tick but it’s gonna be a lot slower.
- Use Date
This specifies the time span of the historical data to be used. You should fill in the “from” and “to” fields.
You can choose to check this box or refuse to check it. If it is checked, the expert advisor will be tested and optimized.
- Open chart
If enabled, it will ensure that a new chart is opened when the backtesting begins. This displays all that would be happening on the trading chart; trade entries and exits.
- Modify expert
If you click this button it will take you to the MQL4 source file where you can edit the expert advisor’s code.
- Begin testing.
Click on the start button after setting up all the required parameters.
- Optimize the results
This simply means sorting the data in the results table. This can be done by clicking on any of the headers of the results table and sorting it as desired.After optimizing the results you can choose to save the results by right clicking on the optimization results and select save as report.
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