I am just starting out in the FX business and am looking to backtest some simple trading systems. Can anyone recommend a a good place start.


Depending on what time frames you are interested in, you should look for a chart service that has a lot of data.

Certain brokers, like GFT, are not good for back testing on the lower time frames. They may only keep a few days worth of data on the 5 min or 15 min charts.

The one I use for back testing is FXPro. I would NOT recommend live trading with them, but if you go to their website, they will give you a “free for life” MT4 demo account that has not only plenty of data for Forex data but also data for Gold, oil, S&P futures, dow futures, even corn and wheat. FXPro’s free demo account has been an indispensable tool for me on many occasions.

Happy pipping!

Backtesting truly has limited value. I personally see zero value in it. Why waste time with backtesting when you can do live forward tests with a demo account feeding you live data? Don’t fall in love with backtesting… go forward…always go forward and go live. Backtesting has a huge flaw since it does not see every point movements and anything less than 100% accurate is a waste of your time to give you false data.

I agree with JohnnyFX. Backtesting is limited. Its better to demo test than back test.

I’ve been using a program called Forextester. You can download price and volume data for all of the major pairs for the past 15 years. You can pick a starting date for your testing and advance the data in real-time, or as fast or slow as you prefer. There is a free downloadable trial version, and the pro
version allows you to use all of the technical indicators that Metatrader uses.
It is great for spotting historical S/R levels. You can test different trading methods over the same time periods. You can go over years worth of data much quicker than doing it in real time. The one disadvantage of practice accounts is that everything is happening in real time, so it takes much longer to evaluate your trading methodology.

In forex there are many many ways to skin a cat. I am always watchful for those who say that something is always bad, or doesn’t work, or try to say that there is only one way of doing certain things and treat them with skepticism.

Back testing is a fine tool, but you must remember that it is just that, a tool. It is not the key to success. Demo trading and live trading are also important tools in their own rights. You must remember that each of these tools have their own value.

There is no reason for any trader who may or may not have had success with back testing in their own trading to dismiss it entirely. Plenty of traders have used this tool to further their own trading skills.

Most of all, remember to have fun.

Happy pipping!

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You will only trash backtesting if you have had extensive experience with it and most traders have had extensive experience with it if they have been trading for a while since we all start out the same having read the same crappy advice given by so called gurus. So, I too have had extensive experience with backtesting and I can honestly say that it is a crappy waste of your valuable time!!! Not only that, it gives you a total false sense of security. Are you here to give newbies useful advice or the same crappy ones we all grew up with and only learned to toss them out after having personal bad experience with them? I don’t know about the rest of you, but I am only interested in giving honest, no BS opinion of mine to newbies who care to read them. This is what they need most of, honest value driven opinions rather than the same crappy sugar coated BS we see day in and day out on all forums. Clearly, from what I see, most traders want newbies to either suffer or want them to fail. I just want them to see thing straight from get go. Having said that, backtesting is a horrid utter miserable wasste of your time. If you want to waste your time only to get a false sense of security of your strategy, go ahead. Backtest years worth of data. What the hell is the point of backtesting 10 years worth of back history data? Test your strategy live on a demo account. And even that is a waste of your time after a while. At some point, you need to go live with a live real money account. And you won’t learn a damn thing backtesting to death. Demo, learn, then go live as soon as you feel upto it. If you aren’t upto it, then this is not for you. Don’t delude yourself and get yourself in a backrupt situation. As you can see even on this forum, people are starting to blow substantial accounts and getting themselves in big trouble. Don’t get all riled up because I tell the un-sugar coated truth to newbies who choose to read it. And if you are contemplating FX trading to have “fun”, you need to have your head examined. It’s only “fun” if you are making money and have most aspect of FX trading down somewhat. If you are losing or confused or frustrated newbie, this is far from “fun” no matter how lighthearted you choose to look at it. But you should look at this dead seriously, not lighthearted or fun. Please, don’t have fun. Have fun later when you have somewhat mastered trading and are starting to rake in PIPs. Then have fun. At the beginning you should be dead serious and dead committed. Zero fun allowed.

There are very few absolutes in trading, and backtesting being a waste of time isn’t one of them.

Backtesting is third in the ranking of reliability behind demo trading and of course live trading, but it’s a useful tool.

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While I hate to disagree with a fellow Devil Dog I have to concurr with Johnny Bananas on this one.
There’s nothing fun about seeing backtrating demonstrate an 80% + win rate only to find that it doesn’t work nearly as well in life. If you are just starting out I would recommend applying the fundamentals to a demo account until you find yourself not only winning consistently but also price that you’re able to maintain money mx discipline.
Before I joined the corps I blew live account on a strategy that was ‘proven’ through backtesting because I was new to the game and didn’t repect fundamentals and money mx.

Now I look at like a Mil operation.
Practice practice practice. Yes it helps to look at historical info but don’t take it as doctrine. Now I look at those who are succesful and disect their strategies before demo ing. Live trading doesn’t come until the method is mechanical.
As a novice trader Your demo trading will tell you more about yourself than anything.



Ouch! I can see why backtesting wouldn’t be your best friend after that. But at the risk of telling you what you already found out - backtesting should be followed by forward testing should be followed by live trading at low volume.

Without backtesting, I would probably still be fiddling with MA cross strategies and Parabolic SARs. It was backtesting that proved to me how 95% of systems are basically worthless (expectancy rates of around 50%) and encouraged me to give up almost every indicator and trade in a far more discretionary way. Can’t beat it…

Whats after backtesting for reliability?

Whats after backtesting for reliability?

Reading about other peoples backtesting. :slight_smile:

Lol, I was going to say tea-leaves Phil.

Pablo, I don’t know, common sense probably. Look at most systems, here or in other forums and they don’t make any kind of sense. Worse still, I could live with the baffling logic behind them, but they’ve no positive expectancy either. Either that, or they’re so clearly tailored to a particular market condition that you know they only work when the market’s ranging or trending, but never both.

Ok you got two options look at the history (back testing) or present prices (demo/live trading). Which one will get you a feel for how the market reacts? Any one can make a trading plan where the it matches a back test. So why do the least likely to be accurate. Try for yourself what works demoing. Back testing gives false hope to some systems. I feel its better to test live than a history


You are not necessarily disagreeing with me at all. I will go as far to say that if you hang all of your hopes and dreams on back testing YOU WILL FAIL! BOTTOM LINE.

However, like I said, it is a useful tool. If you back test a strategy and go straight to live trading, your nuts! back test to get a rough idea of what a strategy might do, then extensively demo, and only after demoing the system and becoming confident and comfortable with it should you even think about going live.

Without back testing a strategy it is hard to start from square one. You can cut through a lot of bull by manually back testing a strategy.


Who would have thought that this idea would be so controversial.

Semper Fi and happy pipping! :wink:

Hi there!

My opinion on backtesting, i backtest my plans, simply to see how they would do. Its just a tool in the traders toolbox its not the be all and end all.

I can understand why some traders dont want to backtest and thats also fine.

Forex and trading in general is one of a few businesses where you can look back in history to see how your business plan would fair, i choose to take advantage of that!

Happy trading


It’s not either or for me…
[B]Backtest [/B]- see if it’s got any merit at all (saves you time messing around with strategies with no positive expectancy), [B]forward test [/B]- see if there’s anything missing in backtesting, [B]live test [/B]- be damn sure it works.

Forward testing ok now tell me how do you forward test

Well said!

By demoing, why?