The first thing you will need is a trading journal so you can journal your trades as you go through your backtest. Then, on your MT4 or MT5 charts you will want to choose your market and time frame that you want to carry out your backtest. How to backtest a trading strategy using Tradingview, MetaTrader4 or any other Forex trading platform.Sign up for TradingView and get up to a $30 bonus by us. The great part about MetaTrader 4 is that you can create automated trading strategies called Expert Advisors (EAs) and backtest them in the built-in Strategy Tester. If a strategy works well after thorough testing, the next step is to start testing it in a demo account to see if it works in real-time market conditions. Find Robust (MT4) Trading Strategies That Work Over Many Years and Perform In Live Market Conditions. A Successful Strategy Example With Backtest That Has Been Trading 4+ years on Live Account.

MetaTrader 5 is a solid automated backtesting platform. But did you know that it’s also a pretty good manual backtesting platform?

In this post, I’ll show you how to use this free software to manually backtest your strategies. This is a great option if you don’t want to purchase software like Forex Tester.

I’ll give you all the tools that you need and the exact steps on how to do it. If your broker only has MT4 available, then It will work in a very similar way.

Why You Should Backtest

Backtesting is an excellent first step in helping you determine if a strategy has an edge or not. Since you can run through historical data very quickly in backtesting, this gives you a lot more data than if you only traded in a demo or live account.

Testing that might take months or years in demo trading, can be completed in a matter of days or weeks with backtesting.

You can also practice a strategy when the markets are closed, making it an ideal training tool.

So it’s extremely beneficial to learn this skill and MT5 is a good software to start with because it’s free.

SEE ALSO:The Top 7 Manual Backtesting Software Solutions Compared

This is the beginning of the roadmap to successful trading. To get a copy of the Trading Success Roadmap, read this post.

Here we go…

Download MetaTrader 5

The first step is to download MetaTrader 5.

You can get the software from your broker or you can download it directly from the MetaTrader website. It’s usually best to get it from your broker, but if you don’t have a broker yet, the MetaTrader version will do just fine.

Once you have a broker, you can connect to your broker through the MetaTrader version.

When you get the software from your broker, it’s automatically setup for that broker, so it can be a little easier to get started. Either way, you can get the complete MT5 installation instructions here.

Download Your Data

In order to do a valid backtest, you should have as much historical data as possible. Over the years, I’ve tried several backtesting solutions that only allow you to test a couple of years of data.

That’s totally useless because you won’t have enough trades to make a valid decision about a trading strategy.

So get as much data as you can. To download additional data, go to: View > Symbols

Then select the currency pair that you want to download data for. After you’ve selected the pair, click on the Bars Tab.

In this example, I’m going to download the USDCAD currency pair.

On the Bars tab, select the timeframe of data you want to download, then the starting and ending dates of the historical data.

Finally, click the Request button to do the download. I found that I had to click the button several times to get the data.

So if you don’t get it on the first try, keep trying.

If you have your own data, then you can upload it with this button.

Once the data is downloaded, you will see it in the window. You can scroll through the data to see how far back it goes.

That will give you the data you to do your backtesting.

If there isn’t enough data from your data source, then consider downloading additional data from this provider.

Open Your Spreadsheets

Trade Tracker Spreadsheet

Before you get started, you’ll need a spreadsheet to record your results. One of the biggest benefits of other software is all of this information is automatically recorded for you.

But if you would like to continue using MT5, then create a spreadsheet with the following columns:

Open date
Open time (if day trading)
Currency pair
Long or short
Open price
Close price
Stop loss price
Take profit price
Pips result
Pips risk
Pips to profit target
% Risk on trade
Risk multiple result
$ P/L
Running balance
Wins/losses
Win %

TraderEvo members get this spreadsheet as part of their membership. Once you’ve built your spreadsheet, then move on to the next step.

Backtesting Results Spreadsheet

Next, you should keep a spreadsheet that tracks the results of each of your individual tests.

Be sure to track the following for each currency pair:

System name
System notes
Chart timeframe
Version
Test number
Return
Win Rate
Trades

Then create a sum and average in the last two columns.

Keep Your Trading Plan in Front of You

When you’re backtesting, it can be easy to deviate from the plan. If you’re like most people, you’ll start tweaking the strategy in the middle of the test.

I’ve done this before too, so that’s why I keep my trading plan in front of me while I’m testing.

It will keep you on track and ensure that you are sticking to the plan.

You can get a free PDF download of the Trading Plan Worksheet I use here.

Once you have your plan in front of you, it’s time to begin your testing.

Start Testing

Now it’s time to get started!

First select the pair and timeframe that you want to test.

Next, add any indicators that you’ll be using to your chart.

Then scroll your charts back to a point in time that you want to start from. If you are testing the H4 chart or higher, I would recommend going back as far as possible.

You can usually test all of the data for a Forex pair on a H4 chart or higher.

When testing lower timeframes, you should pick a few timeframes and test on those timeframes only. Pick a good mix of timeframes that have the following characteristics:

Strongly trending market
Strongly ranging market
Neither strongly ranging or trending

That will give you a good idea of how your strategy will perform in different market conditions.

Do the following to scroll back quickly on your chart:

1. Turn off Autoscroll. This will stop the chart from moving to the most recent candle every time price changes.

2. Hit Enter on your keyboard to specify a start date. A small box will appear in the lower left corner. Enter the date that you want to scroll back to on the chart in dd.mm.yyyy format, then hit Enter again. You can also manually scroll back to the date on the chart that you want to start from.

Once you have scrolled back to the historical data that you want to start at, then hit F12 on your keyboard to move the chart forward, one candle at a time.

Record Your Results

Every time your setup fires off, place a trade and record it in the spreadsheet. You don’t have to take screenshots at this point because you don’t even know if the strategy works or not.

So just keep testing as fast as you can, so you can get as much data as possible. Creating screenshots will only slow you down.

Review Your Results

Now take a look at your spreadsheet and calculate the following:

Win Rate (%)
Return (%)
Number of Trades

This is enough data for now. It will help you understand if you want to pursue this strategy or not.

If you want to be extra sure, do another round of testing to verify your results.

Sometimes you might be distracted or n

Backtesting Trading Strategies Mt4