There are many reasons why backtesting is such an integral part of your trading toolbox. Backtesting allows you to have a better grip on your strategies, and it also improves your overall profitability. But what are some of the best tools for someone who's just starting? In this list, you'll find four of the best forex backtesting software that are perfect for beginners.
The list starts with an application that you may not realize can also be used for backtesting.
That's right, the ever-popular MetaTrader 4 (MT4) and MetaTrader 5 (MT5).
The MT4 is most commonly used for real-time trading, whether it'd be a demo or a real account.
It's licensed to most brokers so that they can provide a trading platform for their clients.
The MT4 is best for backtesting Expert Advisors (EA) or sometimes referred to as trading robots. It would be a cinch for the MT4 to backtest EAs, but it's slightly a hassle for manual backtesting. It would fit the budget of novice traders who have yet to appreciate the benefits of backtesting or those merely dabbling with backtesting.
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Backtesting With A Spread Sheet
Here's another free application for you -- sort of.
If you have a spreadsheet software installed on your computer, what you only need is the historical price data, and you can find that on Yahoo Finance.
Once you downloaded the data, paste them on the spreadsheet, create a chart, and then add technical studies.
You are only going to enjoy this process if you genuinely enjoy crunching numbers on a spreadsheet software; otherwise, you are most likely going to strain over using this method. Spreadsheet backtesting is not practical for most beginners since it also requires mastery of how specific indicators are calculated, and that is not what most newbies are accustomed to.
Here's an example of how you can construct an indicator on Excel using price data downloaded from Yahoo Finance:
TradingView is a trading platform that is gaining significant popularity because of its social sharing element.
This charting package is equipped with plenty of technical indicators, and traders can trade directly from it once they connect it with TradingView's selected brokers.
Overall, TradingView's free account is still more than enough for backtesting. It's an excellent option that boasts broad capabilities not just for backtesting but for studying charts and price action comprehensively.
Here's a quick demonstration of how backtesting using TradingView works:
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Forex Tester 4
Forex Tester 4 is an application that is developed to serve one goal: to backtest trading strategies.
Backtesting is not this software's secondary purpose like MetaTrader or even TradingView, so investing in Forex Tester is a clear commitment to backtesting objectives.
As mentioned, Forex Tester 4 is a commitment for traders who truly want to perfect, improve, or at least understand their strategies' performance. The investment in Forex Tester should be taken as a fee for achieving long-term consistency through backtesting.
Here's a quick look at Forex Tester:
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So, there you go those are the four backtesting software that beginners can utilize to perfect trading strategies. If you like this post, let us know by leaving a comment on the comments section below.