Backtesting a trading strategy is an important part of forex trading. Not only does it prove you are using the right techniques, it can also help you see whether you are wasting your money. The best backtesting software can help you to test multiple strategies in the same currency pair.
One of the most important things to do when testing a strategy is to make sure you have the best data possible. Using the wrong data can lead to a less than impressive result.
It can be difficult to measure the effectiveness of your trades without access to the best historical data. If you can’t afford to buy expensive data packages, you can use spreadsheet programs to do the trick.
To make the most out of your backtesting, you should also make sure you have a good charting program. There are many free ones out there. These include MetaTrader 4 and TradingView.
Another good choice is a note taking app. Whether you are using an app or a notebook, make sure you write down everything you know about the strategy. This includes the technical indicators you are using, the number of lots you are trading and the size of your maximum risk.
The best way to backtest a Forex strategy is to look at the long-term performance of your chosen strategy. You can analyze the price action of a certain currency pair for 10 years or more.
The most basic step is to choose your strategy and currency pairs to test. Some options available are automated trading software, free analytical tools, or a combination of the two.
