To ensure your forex trading robot works optimally, it’s essential you backtest its performance using the in-built expert advisor tester on MetaTrader 4.
Even though forward testing the performance of an EA is important, backtesting gives you the opportunity to carry out simulated forex trading within a short period of time, and assess the results.
Furthermore, with proper optimization, you can tell which settings are most appropriate when tested against forex historical data.
This article will talk about how to use expert advisor tester on MetaTrader 4.
What is Expert Advisor
Just like the name suggests, an expert advisor, or a forex robot, is a piece of software installed on the trading platform and used for executing orders without a trader’s direct intervention.
The execution of orders is carried out automatically or mechanically following some preset instructions, which is why the software are referred to as experts or automated trading systems.
Before creating a forex robot, you’ll need to identify a trading strategy.
Thereafter, you’ll embed the strategy onto the robot so that trade decisions can be automatically completed 24/7 on your behalf.
You’ll need to program your strategy into the expert advisor or hire a programmer to do the work for you.
Much better, you can use a forex EA generator, which allows you to create reliable trading robots without the need of mastering any programming language.
After creating the forex EA, you’ll need to install it on the trading platform. You can adjust the settings as appropriate and launch the robot to execute orders in the market.
So, what is the best expert advisor?
The best forex robot is the one that gives you the opportunity of making profits round-the-clock.
Instead of glaring at the computer screen the whole day looking for possible trade opportunities, you can entrench the strategy into the robot, and save yourself such hassles.
How to Backtest Expert Advisor MT4
One of the most powerful features of the MetaTrader platform is that it allows you to check the performance of expert advisors against historical data.
Backtesting is very useful, as it assists in gauging the effectiveness of automated trading systems, especially before deploying them to live market conditions.
If you backtest a trading robot and understand how it performs in various market conditions, you can finetune it or deploy it for trading in conditions it’s likely to generate the most profits.
Before backtesting the forex robot, you should ensure it’s correctly installed on the MT4 platform. Click here to learn more on how to install a forex robot on the trading platform.
The first thing you need to do is to open the Strategy Tester in the MT4. To open the Tester panel, click on “View” in the Main Menu and select “Strategy Tester”.
You can also press CTR + R on your keyboard.
Consequently, the Tester panel will appear at the bottom of the MT4 screen.
At first, only the “Settings” and “Journal” tabs are appearing on the Tester panel. The rest of the tabs will be seen as more actions are completed.
For instance, the “Results” tab will be seen only after the forex robot has undergone the testing process.
Here are the tabs available on the Tester panel.
- Settings—the settings of the parameters for testing; for instance, the type of expert to be tested.
- Results—the results of the testing process done against forex historical data.
- Graph—a graphical representation of the testing process.
- Report—a comprehensive report on the testing process.
- Journal—a section that keeps records of every activity of the robot.
- Optimization Results—a section that keeps the optimization results of the robot.
- Optimization Graph—a graphical representation of the optimization results.
To test the performance of the trading robot, click on the “Settings” tab.
Next, after selecting “Expert Advisor”, select the forex robot you want to test from the menu. All the installed expert advisors will be available here.
In this case, we are going to select the “Bollinger Band EA by Forex Robot Academy”.
After the forex robot has been selected, click on “Expert properties”. Clicking this button will assist you determine the variables to be optimized to give the most favorable results.
On the window that pops up, set your appropriate parameters for “Testing”, “Inputs”, and “Optimization”.
- Testing—defines the general parameters to be used for optimization.
- Inputs—these refer to different variables that influence the performance of the robot. If it is checked, it will add the inputs to the optimization process; otherwise, they will not be added. If it is checked, you will need to double click every field to set the values for the various parameters.
- Optimization—it gives you the opportunity to define various limitations for the optimization process. If you want to activate a limit condition, for example, Profit Maximum, you can check the provided box.
Once you’ve set the parameters, press “OK” to close the window.
Next, select your preferred currency symbol and trading period.
If the Strategy Tester does not find any past saved forex data for the symbol or trading timeframe, it will go ahead and download the previous 512 charts.
Depending on your preferences, you can select any three historical data modeling methods for backtesting the expert advisor.
The possible options are:
- “Open prices only”—it is the quickest technique appropriate for testing robots that control bar opening.
- “Control points”—it gives results that are regarded only to be approximations.
- “Every tick”—it gives the most accurate modeling results. Because this technique interprets a big quantity of tick data, it is slow and can make your computer operate lower than normal.
In this case, we are going to select “Every tick” modeling technique. You can also select your preferred spread.
The “Use Date” button determines the range of the forex historical data for performing the testing. You can check the checkbox and set the “From” and “To” fields as appropriate.
To ensure the trading robot is optimized after testing, check the “Optimization” button. If you leave it in the disabled state, the robot will just be tested and not optimized.
If you click the “Open Chart” button, you’ll be directed to a new chart that displays a chart of the currency pair chosen for testing.
On the chart, you can find order execution details. You can open the chart only after the expert advisor has undergone testing.
Depending on your preferences, you can click the “Modify Expert” button to launch the MetaEditor and make modifications to the source code of the robot.
If everything is set, press the “Start” button. Testing or optimization will be done and a progress bar will be displayed at the bottom of the Tester panel.
Once the number-crunching is complete (it takes varying amounts of time depending on the complexity of the defined parameters), you can see the results at the Graph or Results tab at the bottom of the Tester panel.
This is how you know whether your expert advisor will be profitable or not.
On the Optimization Results tab, you can see the outcome of the optimization process.
The data presented can give you a good feedback on the behavior of the expert advisor.
Expert Advisor Tester
As mentioned earlier, an expert advisor tester enables you to check if the strategy entrenched in your robot will be profitable or not.
If done correctly, you can make reliable projections on how the expert advisor will behave when exposed to real market conditions.
Although using the in-built MT4 Strategy Tester is good, it is not user-friendly, especially for beginner traders.
You need to apply several settings before you can get the results you desire.
Furthermore, using the Strategy Tester usually consumes a lot of time. If you lack enough skills on how to test forex robot, you may not get good results.
Also, if your computer lacks enough capacity, you may slow down other programs or make them to crash when running the Tester.
As such, several backtesting software have been created to ensure traders overcome the limitations of MT4, and increase the accuracy of the tested results.
One such tool is the Forex EA generator from the Forex Robot Academy.
Apart from allowing traders to create amazing expert advisors without any programming skills, the EA generator gives automatic backtested results for your strategies.
After defining your trading parameters and completing the EA creation process, you’ll get automatic backtested results. This way, you can promptly gauge the profitability of your trading strategy.
Therefore, if you need more accurate backtested results that are delivered 100 times faster, you can try using the forex EA generator than relying on the in-built Tester on the MetaTrader platform.
Forex Robots Tested
If you fail to backtest the performance of your robot, you may fail to understand its behavior in real market conditions, something that can increase your losses.
Tested robots have a higher chance of winning trades in the market.
Backtesting normally discloses failing strategies that can make you lose money.
With a robust tested result, you can foretell how the EA will perform, since it’s nearer to the actual market environment.
If a trading robot does not show convincing backtested results, then it’s not worth your time and money.
Forex robots tested also increase your trading confidence. If you’ve known how to test a forex robot, you’ll become more relaxed in your trading, mainly because you’ve seen the performance of the robot under diverse market situations.
Knowing how to test expert advisor MT4 makes you aware of the characteristics of your trading system and assists you develop a ‘sixth sense’ about the forex market.
Since you’ve known how your robot could have performed in the past, it gives you an extra assurance that it’s likely to perform the same way in the future.
Simulated Forex Trading
Manual traders usually rely on trading simulators to gauge the performance of their strategies.
This forces them to be glued to the charts while monitoring their trades and making adjustments, something which is tedious and time consuming.
However, you can use a backtesting software to save yourself from the hassles and generate more accurate results.
Backtesting is similar to using a forex trading simulator, but it’s much faster and gives more reliable results.
Backtesting your strategy on forex historical data gives results of unprecedented accuracy.
If you do a test on the trading platform, you’ll get a more accurate picture of the robot’s previous performance, something difficult to achieve manually.
Forex Historical Data
To successfully use a backtesting software, you need access to forex data, which will assist you gauge the performance of your strategy.
Forex data is historical price data that represents how the market performed in the past.
Since the forex market is usually volatile, with plenty of upswings and downswings, accessing the data will be instrumental in correctly predicting the performance of your robot in the future.
Since the MetaTrader platform lacks access to accurate tick data, there are several online places where you can get quality forex historical data.
For example, a good place where you can get the data for free is Tick Data Suite software, which can be downloaded from the Dukascopy servers.
The Tick Data Suite software is very versatile and will give you comprehensive forex data for making your analysis.
The software incorporates actual historical variable spreads, permits actual simulation of slippage occurrences, and gives you the opportunity to run multiple backtests at the same time.
Expert advisor tester can disclose the dark side of a strategy entrenched in a forex robot.
If you check the backtesting results, you can gauge the performance of the robot when exposed to real market conditions.
If an EA fails to give convincing backtesting results, then it’s not worth your time and money.
So, before using any expert advisor for trading, testing its performance against forex historical data can greatly reduce your losses.