From 2020 to till now, forex is all the rage. The Covid-19 crisis continues to rage relentlessly, making its way into new countries and regions every day. Due to lockdown restrictions, millions of consumers have been confined to their homes with no income but Forex traders earn profit from their trades. From the most important and Benefits of Forex Trading platforms, You do not need lot of amount to start trading. You may access the real market at just $200. Demo accounts cost nothing, and they are indispensable for forex education. Simple to create, they allow you to learn in a simulator.

This article is suitable for novices and experts who want to test new strategies before opening live trades. We have given in depth explanation about how to back test your strategies in MT4 demo account. We hope this article will be beneficial for You.

The use of MT4 strategy tester

The reliability of MT4’s strategy tester is often criticized due to the inaccuracy of the data provided by brokers. Backtest results can therefore be approximate. Despite these shortcomings, a backtest with MT4 provides valuable information on past performance. The backtest is a necessary step before launching an EA on a demo account, and then on a real account.

The MT4 strategy Tester

To run a back test, open and log in to the MT4 trading platform. From the main menu, navigate to View then select Strategy Tester. This window allows you to configure the parameters of the backtest.

Select the parameters according to the available options: the choice of the EA, the currency pair, the chart’s time frame, the model (select “Every Tick” for greater accuracy), the dates of the test period, and visual mode in order to see the progress of the strategy in real-time on the chart.

In the “Input parameters” tab, you can change the parameters in the “Value” column. The remaining columns are used for the strategy optimizer.

Click on “initial value” in the strategy tester’s window to launch the test.

Interpreting the results of MT4 backtest

When testing is complete, you can access the results from the tabs at the bottom of the strategy tester’s window.

The report tab displays a detailed analysis of the results. You can save it by right-clicking on the table.

The quality of the modelling is an important element that allows you to verify the accuracy of the data used for the test. Generally, the quality does not exceed 90% unless you can afford to purchase very reliable data.

You can also analyze the results using the following tabs:

Performance graph

Transaction Details

The journal to see if there are any errors

Conclusion

Backtesting is a precious tool available in most trading platforms. It is mainly used to determine the effectiveness of a given trading strategy. With backtesting, they can test out the effectiveness of their strategies by applying them to the historical market data.  Dividing historical data into multiple sets to provide for in-sample and out-of-sample testing can provide traders with a practical and efficient means for evaluating a trading idea and system.

While traders may not be able to do that in real life, the ability to simulate certain levels in past economic data can help achieve almost the same effect. If the aftermath results show that the current trading strategy is paying off in the past, it will give traders more incentive to use the same strategy in real life.