Before computers were a thing, traders used to draw their charts by hand. Munehisa Homma is famous for using Japanese Candlesticks to backtest and successfully trade what many consider the first futures market in the world, the Dojima Rice Exchange of Osaka.

Fast forward to today, and manual backtesting is still one of the best ways to learn how to trade, and computers have allowed us to speed up the process.

In this post, I'll show you why manual backtesting is so useful, what to look for in the best manual Forex backtesting software, and my top 3 picks for the best software available right now.

Why Manual Backtesting Software is an Essential Trading Tool

Many new traders think that backtesting software is only for automated trading strategies.

Nothing could be further from the truth.

Manual backtesting software is a vital tool for the manual/discretionary trader. I also firmly believe that manual backtesting is the best place for most people to start, when building automated strategies. 

There are some trading rules that cannot be easily programmed into a computer.

So if you start with manual backtesting, you can develop any type of trading strategy.

With a fully automated trading strategy, you're limited by the capabilities of the programming language or platform.

When you find a strategy that's profitable in manual testing, then you can figure out ways to automate parts of the strategy. Sometimes it's even possible to automate the whole thing.

…or maybe you just want to stick to manual trading.

That's great too.

The key is that you have a choice, when you start developing with manual backtesting software.

Manual backtesting also allows you to get to know a trading strategy very well. 

Like going on a date with the same person many times, you really get to know the quirks, strengths and annoying things about a trading system.

When you do automated backtesting, it can be very easy to miss these things because you don't see the result of every trade. You start the test, let it run, then you check the results.

Finally, manual backtesting can be used as a simulator to help you practice an existing trading strategy.

This is similar to how pilots practice flying in a flight simulator.

Just because you have a trading strategy that already works, does not mean that you can just sit back and relax.

Professional basketball players practice free throws all the time. It's a seemingly routine skill, but if they don't practice, they will get worse.

If you don't practice, you'll start to lose your edge too.

Now that you understand the benefits of manual backtesting software, let's look at the components of a great software package.

What to Look for in Manual Forex Backtesting Software

These are the criteria that I used to pick the backtesting software I recommend.

• Ease of use
• Cost
• Historical data
• Analytics

Figure out which features matter the most to you and choose accordingly.

Ease of Use

The first feature I look for is how easy is it to use.

Most software packages work in a similar way. They look like trading platforms and act like trading platforms.

Once in awhile, some software developers try to get too creative and things get weird. But for the most part, most software will look similar and is usually easy to use.

But keep an eye out for for features that streamline the backtesting process.

Manually entering trades is tedious. Any functions that speeds up this process is worth its weight in gold.

The Cost of Manual Forex Backtesting Software

This is a consideration for many traders, so I've chosen software that's affordable, but still has the features that you would need to do a professional backtest.

The price of manual Forex backtesting software starts at about $100 and can cost as much as $500. This is just for the software itself. 

High quality historical data can cost anywhere from a few hundred dollars per market, to a few thousand dollars. Data subscription plans generally start at about $30 per month.

So it's very important to figure out what kind of data a software package includes, before buying it. 

You could be in for a surprise, if there's little to no data available in a software package and you have to pay a lot more to get the data you need to test.

Data Available

That brings us to historical data.

Companies take different approaches to providing data. Some are generous, while others will charge you for every option.

Each approach has its benefits and downsides.

Services that cost more will generally have more data points and provide cleaner data. Their data is also usually more up to date. 

If you need the best data then this is the way to go.

This is especially true if you're backtesting strategies on lower timeframes. The quality of the data matters much more because there is less margin for error.

Cheaper data will usually have fewer timeframes available and the data might not be as recent. But this is a great option if you're only backtesting higher timeframes like the daily chart or the 4 -hour. 

Again, figure out what you need.

The most expensive option is not always the best.

Analytics

This is the biggest weakness in most of the backtesting products I've used.

There was a web app back in the day called Tradingrex which got me really excited because they provided legit reporting, basically for free. Unfortunately, they weren't able to make any money and folded.

But it's really hard to find detailed analytics in manual backtesting software. Pretty much all software will give you win/loss percentage, win/loss ratio, max drawdown and number of winning/losing trade in a row.

The bare bones stuff.

However, there are some metrics that can lead to big breakthroughs in the development of a strategy.

Things like MFE/MAE, Monte Carlo Simulations and monthly/yearly performance breakdowns are simply not available in most manual backtesting packages.

So if you can find a software package with excellent analytics, that is usually going to be the differentiating factor.

My Picks for the Best Forex Backtesting Software

Here are my picks for the top 3 best software packages on the market.

I'll give you the pros and cons of each, so you can make an informed decision.

Hint: My #1 pick is at the bottom.

3. Soft4FX

I'll just come out and say it…

If you're on a very tight budget, then Soft4FX is a good place to start.

Otherwise, you're better off with the other options on this list.

However, I think it's fantastic that a product like this exists, because it gives traders options. It also creates competition, which usually makes all products in the space better.

There are also a couple of really good reasons to use Soft4FX as a secondary backtesting option.

Pros

• Add-on to MetaTrader 4 and 5
• The ability to upload your own historical data
• Very affordable price
• Can be used with 2 MetaTrader accounts and can be transferred
• Pay once, no ongoing fees
• Free data from 1 source

Cons

• Clunky interface
• Only 1 data source available in the software, you have to upload other sources
• Minimal reporting and analytics available
• Only available for Windows
• Have to export data into Excel to get advanced analytics

Final Thoughts on Soft4FX

Realistically, if you're short on cash, it's probably better to wait for Forex Tester to have a sale. The sale price of Forex Tester is only a few dollars more than the regular price of Soft4FX.

However, if you really like using MetaTrader and you think that the features in Soft4FX are good enough, then it's a good option.

It can also be great as a secondary backtesting tool. Maybe you have a second laptop or Windows tablet that you travel with and you simply want to be able to play around with some ideas while you're on the road.

Soft4FX is a great option and you won't have to pay more for a license from one of the more expensive providers. You could even install it on 2 secondary computers, since it comes with 2 licenses.

2. Forex Tester

This has been the industry standard for many years, so you cannot go wrong with using Forex Tester.

However, there are several lingering shortcomings that they have not addressed over the years.

With new competitors coming out, these gaps have become even more glaring, dropping Forex Tester to my #2 pick.

Pros

• Easy to use, similar to most broker trading platforms
• Excellent support, they always return emails quickly
• Common indicators are built in
• Multiple data sources available on paid plan, updated frequently
• Can upload your own historical data
• Backtest on multiple charts at the same time
• Support for automated backtesting, similar to MetaTrader
• Free trial version
• Easy to transfer license between computers
• Neural automated backtesting optimizers, I haven't used them, so I cannot comment on how well they work

Cons

• Difficult to get custom EAs and indicators created
• It's always seemed like the developers are not traders, they aren't good at creating trader-friendly features.
• Reporting and analytics are very limited
• The historical data subscription can increase the cost significantly
• Very limited historical data available with the free data plan
• Only available for Windows, does not work well on Virtual Machines (VMs)
• Can get slow when adding just a couple of indicators to the chart
• Have to export data into Excel to get advanced analytics
• The trading education modules aren't useful
• Automated backtesting functions are similar to MetaTrader, nothing new or improved

Final Thoughts on Forex Tester

I have a love/hate relationship with Forex Tester. I've heard this sentiment echoed by many professional traders over the years.

On one hand, the core set of features is really good. They have been the best manual Forex backtesting option for a long time.

When it goes on sale, it's also very affordable.

But as you can see in the list above, there are also a lot of downsides.

To me, the most disappointing thing is that the developer's approach to the evolution of Forex Tester has been iterative. I've always seen a ton of potential with Forex Tester, but they haven't been able to cash in on what's possible.

The software gets slightly better with every new version, but it never has any quantum leaps.

It's like what Microsoft does.

Microsoft is content to make a slightly better version of their products every year. If we're all being honest, Windows 11 is only slightly better than Windows XP.

All things considered, Forex Tester is still a great option. 

But there's something that I like better…

1. NakedMarkets

This is a new entry to the manual Forex backtesting software market and I really like it.

I like it so much that it's my pick for the best Forex backtesting software available right now.

The primary reason that I like it so much is because it has features that are useful to real traders. The workflow of the software is intuitive and streamlines the trading strategy development process. 

Many times, software solutions are built by developers, not traders. So there are features that may seem useful from an outsider's perspective.

But a real trader wouldn't use them.

What impressed me is that NakedMarkets has manual backtesting solutions that are better than anything I could have ever thought of. Keep in mind, I've been trading since 2007…so I had a really good picture of what I wanted to use.

For example, the idea of Trading Rules in NakedMarkets is fantastic. They are basically building blocks that you can use to speed up manual backtesting, or build up to fully automated strategies.

Just drag and drop them on the chart and they can set your stop loss, take profit, trailing stop and more. This feature alone can save you hours of backtesting time.

But that's just the beginning. You can use multiple Trading Rules to build a manual system, or combine them to create a partially or fully automated trading strategy.

The visual Rule Manager also has more features than similar “no-code” building tools out there.

Pros

• Easy to use, similar to most broker trading platforms
• Excellent support, they answer quickly
• Common indicators are built in
• FREE high quality data from multiple brokers 
• Advanced reports and analytics for NakedMarkets, MetaTrader, Forex Tester and Oanda (via Oanda API)
• Community where you can request features and share trading strategies to test
• Drag and drop trading rules for entries, exits and trade management
• Create trading rules without coding
• Designed and developed by a full-time Forex trader
• Free trial version

Cons

• This is still the first version of the software, so there are still small kinks to be worked out
• Only available for Windows, I haven't tested it on a Virtual Machine (VM)
• Since the rules tool is visual, there might be some limitations on the complexity of the rules you can create

Final Thoughts on NakedMarkets

Although NakedMarkets is new, I love the direction that they are taking.

It's a fresh take on manual backtesting and in my opinion, a quantum leap in streamlining the process.

Backtesting can be boring…you have to enter the same orders over and over.

But if you can automate some parts of the process with Rules, then it can make the process more bearable.

It might even make it fun.

You can learn more about NakedMarkets and get a discount here.

Conclusion

So that's my current pick for the best software for manual Forex backtesting.

Sure, you could use MetaTrader or TradingView for manual backtesting. But they are not built for that and you would have to use a spreadsheet to record your trades.

That's really clunky and takes a long time. The software mentioned above makes the process much easier.

I'll have more tutorials and updates using NakedMarkets in the future. Be sure to sign up for the email list to get future updates.

What's your favorite software? Got questions? Let us know on Twitter.

To see all of our recommended products, go here.

The post Best Forex Backtesting Software Reviewed appeared first on Trading Heroes.

In This Episode:

• Why this trader created his own backtesting software
• Where he learned to trade and the timeframes he trades on
• The website where he shares some of his trading strategies and track record
• How to create drag-n-drop entries and exits WITHOUT coding
• Manual backtesting demo and how his software speeds up the process
• Demonstration of creating and testing automated strategies
• Free historical data from multiple brokers
• How this software could easily replace your trading journal
• And more!

There's a big difference between software that's created by someone who trades and someone who doesn't. This is one example.

I met Denis at The Truth About FX conference in 2017. At the time, he was trading full-time and providing trading signals.

I talked to him a bit on the train ride back from central London.

In talking to him, I found out that he is Beta Trader. It's always cool to meet people behind trading sites. I didn't keep in touch with him after that.

Then a few months ago, I got a message from him via Walter's forum, asking me if I wanted to test his new software called NakedMarkets.

I'm always open to testing software from people I know, so I volunteered to be a tester. We are both students of Walter.

As soon as I read through the documentation, I knew that he had something special.

There are features that I haven't seen in backtesting software under $500, and some features that I haven't seen anywhere.

What I like most about his software is that it is very modular.

So you can create small components, like entry and exit rules. Then you can simply drag and drop those rules on your chart to speed up manual backtesting.

Or you can use those components to build fully automated or semi-automated trading strategies.

One thing that I've been looking for is an easy way to automatically download trades from Oanda and analyze the performance of the account. I thought that a trading journal was the solution.

But I asked Denis if it was possible to do it in NakedMarkets and he implemented it in just a few days.

Amazing!

So NakedMarkets can also be used to analyze live trading performance.

Anyway, there's nothing like seeing the software in action. So watch the video find out more about Denis and how the software works.

You can get a special Trading Heroes discount on NakedMarkets on this page.

Click Play to Watch the Episode

Resources Mentioned

• NakedMarkets backtesting software
• Walter Peters
• NakedMarkets Forum
• The Truth About FX Conference

Other Ways To Get The Trading Lifestyle Podcast

• Click here to subscribe via iTunes (if you like it, a five-star review is greatly appreciated)
• Click here to subscribe via RSS (non-iTunes feed)
• Click here to hear all of the other podcast episodes

Thanks for Listening!

I really appreciate you joining me for this episode of the podcast!

If you know of a trader who would benefit from any of the information in this post, feel free to share it with them.

Be sure to subscribe to the show on iTunes or YouTube and if you love it, a 5-star review is greatly appreciated!

The post Taking Backtesting Software to the Next Level: NakedMarkets // EP30 appeared first on Trading Heroes.

I'm been using Forex Tester for a long time. But there were a couple of versions that I didn't recommend because they had some serious bugs. So will Forex Tester 5 be a zero or a hero?

My testing has shown that Forex Tester 5 works well and does have some useful upgrades. The upgrades are incremental, but given that the cost is the same, I feel that version 5 is worth the money.

Keep scrolling to get the details.

Watch the video or get the text version below the video.

Where Can I Backtest Forex Trading Strategies?

This is the question that led me to Forex Tester (FT) many years ago. Since then, many different backtesting solutions have come to market.

I tested them in this video to see how Forex Tester compared. FT was the winner of that shootout, but I found that one of the other software packages did have some legitimate benefits.

However, at the end of the day, if you want the very best backtesting software publicly available right now, FT is the way to go. 

Now let's get into why I believe that.

Simplified Menu

The biggest cosmetic change in Forex Tester 5 is the menu at the top of the screen. It looks very similar to the “ribbon” menu in Microsoft Office.

I like how the icons are arranged and the layout makes it easy to find things because they are categorized in a very logical way.

This type of menu is much easier to use and is a welcome addition. Forex Tester 4 had a very small and compact that made it really hard to use on a tablet.

So the menu is a great improvement in version 5 and I really like using it.

Strategy Optimizer

Another new addition is the strategy optimizer. It allows you to upload FT automated strategies, or MetaTrader EAs.

You can then do an automated backtest in the software and look for optimizations.

This is similar to the strategy optimizer in MetaTrader 4 and 5.

Forex Tester 5 also goes one step further and they provide automated AI programs that are supposed to help you speed up the process of optimizing your automated trading strategies.

I'm not into automated trading, so I haven't tested this feature. But this can be useful for people who are into trading bots.

Notes Section

Forex Tester also added a notes section, which is really handy. The notes are stored in each backtest and allows you to jot down ideas in each test.

Here are some ways to utilize the Notes section:

• Record ideas on how to change the system for the next test
• Note trade dates that you want to go back and review later
• Write down questions that you have during the test
• Note a chart pattern that you see that you might want to test later
• Journal trades as you take them
• Record your impressions before and after the test

If you store your notes in another place, then it's easy to lose them. Having your notes in the backtesting file is the best solution.

Visual Risk/Reward Tool

Awhile back, I made a video about how to turn the Fibonacci tool in MetaTrader 4 into a visual risk/reward tool. Since then, TradingView has made this a standard tool on their platform.

Now Forex Tester has this tool available in version 5.

To access the tool, go to Charts > Graphic Elements > Risk/Reward Tool.

Then add the tool to the appropriate area of your chart. Here's what that looks like.

This is a great addition to the program. However, if you look closely, there's something wrong here.

The Risk/Reward ratio is not calculating correctly. 

As you can see in the example above, this a buy trade. Since the profit target in green, is bigger than the stop loss in red, the ratio should be greater than one.  But it's not.

I'm sure that they will fix this at some point, but the solution is simple. Just use the opposite tool and you'll be good.

So if you want to calculate a buy trade, use the sell tool, and vice versa.

Multiple Windows at the Same Time

This is one of the biggest advantages of Forex Tester. It's been available in previous versions, but I want to point it out here because it really helps.

In Forex Tester, you can have multiple windows open at the same time. This allows you to watch multiple timeframes and currency pairs at the same time. 

Watch the video at the top to see it in action. It's a really handy to be able to track support/resistance levels on multiple timeframes, track correlation between markets and take trades on multiple pairs at the same time.

I use this feature to watch the next higher timeframe, from the one I'm testing. 

Easy Forex Builder

Let's be realistic.

It's actually really hard to create an indicator/EA builder and give it the ability to everything.

There are many circumstances where you really do need to know how to code, or hire a programmer to do it for you.

Therefore, any “no-code” tool will have limitations. But the Forex Tester team has been building their platform for creating indicators and EAs. It was originally called Visual Strategy Builder, but they have since changed the name to Easy Forex Builder.

They do have a free version that allows you to download 2 strategies/indicators per month. But if you want more, you'll have to pay the monthly fee.

I wasn't particularly impressed with the original beta VSB tool, but you can give it a try and decide for yourself. They may have improved it. In all fairness, I haven't seen a no-code tool that can create complex programs, so EFB is not alone in this regard.

However, I do feel that these types of tools very good for testing basic ideas.

Maybe test a simple strategy with 1 or 2 indicators. Then you can do manual backtesting to refine the idea.

If the idea works, you can code it up or have a programmer do it for you.

Education Buttons

At the time I did the video at the top of this page, the education modules didn't seem to work yet. But now they have the Basic Courses working.

Each lesson is really short and to the point. I went through a few of the lessons in the Basic Courses and they look good.

As you can see, the graphics could be better, but the information is useful.

Downsides of Forex Tester 5

There are a couple of downsides in this software. Obviously there's the Risk/Reward tool bug that I mentioned above.

Another thing that isn't optimal in FT 5 is that the playback can get really slow if you have certain type of indicators on the chart.

I would guess that a lot of that has to do with how complex the calculation of the indicator is, and how many you have on the chart at once. Indicators like the Parabolic SAR can take more time to calculate.

So the solution there might be to get a faster computer. Since I don't use many indicators, if at all, this isn't a problem for me. If you are concerned about this, be sure to download the demo below and test the speed for yourself.

Finally, as I've mentioned about previous versions of Forex Tester, a huge benefit would be a legit reporting system in the software.

They have the basics…win/loss percentage, max losses, trades per month, etc.

But real traders need much more. There was a website that came close in the past, but they weren't able to make money and went under.

In my opinion, upgrading the reporting system would be a huge upgrade to Forex Tester.

Maybe in Forex Tester 6? 

Forex Tester 5 Download

If this appeals to you, get a free demo of Forex Tester and you can give it a try on 1 month of backtesting data.

Use the link in the next section to download the demo.

How Much Does Forex Tester 5 Cost?

The regular price for Forex Tester 5 is currently $299. However, if you wait for one of their sales, you can get it for much less.

On top of that, I have a coupon that will give you an additional discount on top of the sale price. The final price you pay will depend on the sale that they are currently running.

So be sure to check this page to get the coupon and the best deal possible.

Final Thoughts on Forex Tester 5

Backtesting is one of the best ways to develop and practice a Forex trading strategy.

I skipped a few of the features in FT 5 that I already talked about in FT 4. Most of the same features in FT4 are in 5, so if you want to learn about more of the features in Forex Tester, then see this review.

Otherwise, I still recommend using FT 5 for manual backtesting. 

Happy Backtesting!

The post Forex Tester 5 Review appeared first on Trading Heroes.

Learn how to get started with the backtesting feature inside ThinkTrader called Traders Gym. This step-by-step guide will show you exactly what you need to get started with the desktop version of this free manual Forex backtesting software right now.

I wasn't able to find a good manual on how to setup Traders Gym, even on the ThinkMarkets website, so I decided to create one.

Stick around until the end to find out how well Traders Gym compares to the top backtesting software out there.

Step 1: Download the Desktop Version of ThinkTrader

Get started by going to the ThinkTrader website. Then download the appropriate version for your device.

The link is at the top of the page.

I would highly recommend using the desktop version for backtesting. It's much easier to use than the mobile versions.

ThinkTrader used to be called Trade Interceptor, so don't get confused if you see both names online.

There are still some Trade Interceptor webpages out there. They simply redirect to ThinkTrader when it comes time to download the app.

Step 2: Setup an Account and Login

Once the software is installed, sign up for an account. It's free to sign up and allows you to use the backtesting feature.

Now that you have a login, open ThinkTrader and enter your username and password.

Make sure that the Traders Gym button is selected, then click the Login button.

Step 3: Create a New Chart

One weird glitch with Traders Gym is that there's no easy way to go back to the beginning of a chart.

In addition, if you open a new chart and there's already a chart open on that currency pair, your new chart will start where your existing chart stopped.

Therefore, in order start a fresh chart at the beginning of the data set, you need to open a chart for a currency pair that is not already open.

For example, let's say that you have a EURUSD chart currently open and you've stopped at 11/2/2019. When you go to open another EURUSD chart, it will also open at 11/2/2019, not at the starting date that you select.

Now that you understand that, open a new chart by clicking the plus symbol at the top of your screen.

A popup window will allow you to set the parameters for your test.

You can select the following:

• Feed: There are only 2 data sources available. The default TT feed is a good place to start.
• Symbol: Select the symbol you want to test. Stocks are also available.
• Price type: Select bid, ask or average.
• Timescale: This is the timeframe chart you want to use for you test.
• Initial interval selection: Drag the slider all the way to the left to start testing from the first date in your selected range.

It initially looks like you can only backtest 1 year of data, but you can actually get more history. If you click the lower left date on the slider, it allows you to select an older date.

Once those settings look good, click OK to get started with your test.

When your chart first opens, the candles will be huge! 

Adjusting the zoom on the chart is not intuitive. The only way that I found to zoom in and out is to use the scroll wheel on your mouse, or scroll up and down on your trackpad. 

Step 4: Add Your Indicators

Once your chart opens, you can add indicators by clicking on the Indicators button in the toolbar in the middle of the screen. 

They provide most of the popular indicators, so there's a good chance that your favorite indicator is there.

Traders Gym doesn't allow you to upload custom indicators, so if you trade with a custom indicator, you're out of luck.

Step 5: Set Your Speed

The last thing that you have to do before you start testing is to set the speed at which your charts will move forward.

There are 2 settings:

• Tick size: Set how much each tick will move. For example, you could be testing on the Daily chart, but you want to see each tick move on the 4-Hour timeframe.
• Overall chart speed: Set how fast the chart will scroll forward.

Step 6: Start Placing Trades

Now you're ready to start testing!

To start testing, hit the play button below the chart. You can use the back and forward arrows to move one candle at a time.

When you want to take a trade, simply right-click on the chart and select Order window from the menu.

That will bring you to the order window. Input the details of your trade and click Place Order.

Your trade will appear in the Active tab in the account section of the screen. Use the Pending tab to see pending orders and the History tab to see all of your past trades.

To close the trade right-click on the trade and select Close selected orders. You would also use the same process to do any of the following functions below.

You can use the settings button to deposit or withdraw funds, or delete the account.

To create a new account, click the plus symbol next to the account tabs.

ThinkTrader Traders Gym Review

Here are a few of my thoughts after using Traders Gym. The biggest upsides are:

• It's free
• You can use it on desktop and mobile platforms
• They provide a good amount of free historical data

However, there are some downsides. 

I have several issues with this software, but these are the top 3.

Frequent Disconnection

An annoying thing with ThinkTrader (Mac) is that it keeps dropping the internet connection and reconnecting. This makes the icon bounce on the bottom of my screen and is really distracting.

I don't know of any trading program that has to reconnect so often.

It really makes me wonder how reliable this would be if it was used for live trading.

This literally happens every 5 to 10 minutes or so…

Have to be Connected to the Internet to Backtest

One of the biggest benefits of software like Forex Tester is that you can download the price data to your computer and backtest offline.

I can see where this might not be possible on the mobile versions of ThinkTrader because mobile devices tend to have very limited storage.

Downloading data is certainly possible on most desktop devices however, but is not available on the desktop version of ThinkTrader.  

In addition, you need to be connected to the internet and login to even get to the backtesting screen. 

I understand why they do this, but it doesn't make sense when it comes to backtesting.

Only 1 Data Source, No Option to Upload

Finally, there's no option to upload custom data or indicators. It would be nice to be able to import my own data sets like you can do with MetaTrader.

If you need custom indicators for your trading strategy, then you're totally out of luck with ThinkTrader.

Conclusion

So that's how you start manual backtesting with Traders Gym.

You are probably wondering if ThinkTrader is worth using for Forex backtesting.

The answer to that is relative. It really depends on what your needs are.

It might be good enough for some, but totally unusable for others.

To see my complete review of Traders Gym, and how it compares all of the major backtesting platforms on the market, head over to this post.

That video will show you examples of each software, a complete backtest for each and you can see the software in action.

The post ThinkTrader Traders Gym: Beginner’s Guide appeared first on Trading Heroes.

As you probably know, I've been a big fan of Forex Tester, almost since the beginning of this site.

But curiosity started to creep in…

Is there something better out there?

I've been using Forex Tester because it works well, so I didn't have the need to look for other software solutions. But I believe that it's always a good idea to periodically review what you are doing in life and in trading, and make upgrades…when it makes sense.

So I decided to revisit the Forex backtesting software landscape this year and take a good hard look at all of the viable options out there.

Maybe there's something that's better, and at a cheaper price. If there is, then I would love to recommend it to my readers as a better solution…or at least a viable alternative.

To that end, I researched all of the manual Forex backtesting software solutions on the market and tested them with the same trading strategy.

Learn what I discovered, in this video:

Update: I recently discovered a new software that I feel is better than all of these options.

Learn about it here.

Rules for this Challenge

I wanted to test trading products that would be affordable for most traders, so here's the criteria I used:

1. The software can be purchased for less than $200 total (for one-time downloads), or less than $200 per year (for subscription products)
2. The software must be able to be used for manual backtesting
3. The software must be able to backtest the Forex market

From there, I'll backtest a trading strategy that I know nothing about, then reveal the results.

Actually doing the backtesting will reveal a lot about the software.

The Challengers

Based on the criteria above, I rounded up the following challengers:

• Forex Tester 4 (paid, one-time)
• Think Trader, formerly Trade Interceptor (free)
• Soft4X (paid, one-time)
• MetaTrader 5 (free)
• TradingView (free and paid, subscription)
• NinjaTrader (free)
• Excel (paid, one-time)

UPDATE: Forex Tester 5 is now available. Watch the review video here.

You might have a few questions about these products, so I'll clarify my choices.

Yes, the regular price of Forex Tester 4 is $299. However, they frequently have sales where you can get it for less than $140, which qualifies it for this test.

You might think that Excel doesn't belong on this list. I'll explain why I've included it in a bit.

I'm using the Pro version of TradingView, which is currently less than the $200 per year minimum. If you upgrade to the higher plans, then you would be over $200 per year. The price might go up in the future, but it currently qualifies, as of the original writing of this post.

The Categories

Here are the categories that I'll be judging these software solutions on:

1. Overall ease of use
2. Value for money
3. Data availability
4. Usability for manual backtesting
5. Best overall manual backtesting software

Alright, now that we have that out of the way, let's take a look at the strategy that I'll be testing.

The Trading Strategy

I've never tested moving average crossovers because they didn't make sense to me. My belief was that as soon as two moving averages cross over, you've already missed the easy part of the move.

…or so I thought.

…but what if they really do work?

I'm willing to keep an open mind, until I get conclusive proof.

That's why we test. 

So I approached this like a new trader and I Googled:

“moving average crossover strategy forex”

The first legit-looking search result that came up was from the DailyFX website.

When I clicked on the link, I was taken to the site with the trading strategy “rules.” This strategy was a perfect test because it's traded on the daily chart, so I could test it quickly.

The entries and exits are fairly straightforward, so you can test it too and verify my results.

…and it also highlights a few key weaknesses in most of the free trading education on the internet.

You can see the original strategy here.

According to the blog post, the following are the “rules” for the strategy. I use quotations because what I found wasn't a complete set of rules.

For future reference, the title of the post is: “Learn Forex: Trend Trading Rules with Moving Average Crosses.”

This is something important to pay very close attention to. Most of the blog posts, YouTube videos and free eBooks on the internet aren't giving you the rules for a trading strategy.

They are giving you trading ideas, guidelines or concepts. 

Ideas are a good start, but too many new traders think that this is a complete strategy, don't test it, and fill in the blanks with their own rules.

…and they wonder why they lose money.

Guidelines From the Post

Anyway, back to the DailyFX guidelines. Here's what I gathered from the post:

• Use the 50 and 200 moving averages, I'm assuming the simple moving average
• When the 50 crosses over the 200, then enter in the direction of the crossover
• Set the stop on the other side of the 200 SMA
• Trade this on the daily chart

Notice that there are key elements missing from this trading plan.

What I Added

Here's what I had to add, to make this a complete trading strategy. I added as little as possible, to make this a tradable plan. There are other tweaks that I would ordinarily make, but let's start simple.

• Risk 1% per trade
• Take profit when price closes on the other side of the 50 SMA
• Set and forget, no adjusting of the stops or take profits once the trade is entered

Now we have a complete strategy.

Remember that most trading “strategies” out there aren't really strategies because they are missing a lot of key definitions. You can use this worksheet to define a complete strategy.

Finally, I'm going to be testing this strategy only on the EURUSD. Since I'm going to be testing this strategy many times with different data sources, this will also give us a very good indication of if this strategy works or not. 

Example Charts

It helps me to have a visual of how this strategy works. So here are a couple of examples on a chart.

Here's a long example:

A short example:

Testing Results

Once I had a trading strategy to test, I started testing it on each software product. I also tracked the time that it took to test the strategy, so you can make software decisions based not only on cost, but on time savings.

You can see complete recordings of the tests in the video at the top of this page.

Here's a breakdown of the results from each test.

ThinkTrader

• Win rate: 39%
• Return: 16.7%
• Number of trades: 23

Learn more about TT here.

NinjaTrader 8

• Win rate: 50%
• Return: 38.4%
• Number of trades: 32

Learn more about NT8 here.

MetaTrader 5

• Win rate: 46.1%
• Return: 33.6%
• Number of trades: 26

Learn more about MT5 here.

TradingView (paid, Oanda data)

• Win rate: 47.1%
• Return: 34.4%
• Number of trades: 21

Learn more about TV here.

Soft4X

• Win rate: 28%
• Return: 61.8%
• Number of trades: 25

Learn more about Soft4X here.

Forex Tester 4

• Win rate: 33%
• Return:15.2%
• Number of trades: 21

Learn more about FT4 here.

Get the best Forex Tester alternatives here.

TradingView (free, FXCM data)

• Win rate: 38.6%
• Return: 24.9%
• Number of trades: 102

Testing Analysis

So all of the tests were profitable, but they had different results. Still, I would say that this strategy has an edge.

But you may be wondering why the results were so different between the different software products.

Let's take a look at why this could be and how this affects your confidence in backtesting results.

There are several reasons why the results could have been different:

• The data is always different from broker to broker and maybe that's just how it worked out.
• Since I only tested once per software program, I might have made some execution errors. This is why it's important to test more than once.
• There may have been some settings that were different between the platforms.
• The number of trades was relatively low, so maybe the averages haven't had time to work out yet.

This difference in results also brings up an important point. You should test with data from different brokers and currency pairs, to see how robust a strategy is.

Backtesting software that only allows you to use 1 or 2 data sets won't give you the full picture of how well a strategy works. 

But overall, this strategy was profitable across the board. So if this strategy interests you, it might be worth checking out. 

Be sure to test it a few times with different data feeds before moving it into forward testing.

Forex Backtesting Software Rankings

Testing Efficiency

Before I get into the rankings, I'll share with you my efficiency rankings.

I measured the efficiency of each software in days of historical data tested, per minute of backtesting time. 

According to this measure, Soft 4X came out on top.

But remember, faster isn't always better. You can miss trades when you go too fast. 

I actually like the fact that Forex Tester 4 has a reasonable top speed, so you don't overshoot trade entries. In the end however, it's up to you to set a speed that works for you. 

Since this was a simple and straightforward strategy, I could go really fast.

On this other hand, if this were a more complex strategy, I would predict that I would have to go slower and the efficiency rating would be very similar across the board.

Data is data however, and those were my results for this strategy.  

Now that I had a chance to try all of the backtesting platforms, here are my final rankings. I'll also give you some analysis on why I chose the top two in each category.

If you want to hear the complete analysis of all the lists, watch the video at the top of this page.

Overall Ease of Use

1. TradingView (paid)
2. Forex Tester 4
3. MetaTrader 5
4. ThinkTrader
5. Soft4X
6. TradingView (free)
7. NinjaTrader 8

TradingView is such a pleasure to use. You can use it on almost any device with a browser and you don't have to install any software. That's why it's my favorite charting and trading platform.

Forex Tester 4 is second because it's very well integrated, but it still only works on Windows, which is frustrating. You can also download a lot of different data feeds from within the program, making it much more useful than the other software on the list.

Value for Money

1. Soft4X
2. Forex Tester 4
3. ThinkTrader
4. MetaTrader 5
5. TradingView (paid)
6. NinjaTrader 8
7. TradingView (free)

Soft4X is currently under $100 and the best value for money. It provides 2 data download sources built-in, which is good enough for most people to get started. You can also upload your own data into MT4, if you want to test with data from other brokers.

The only downsides to Soft4X are that it's little clunky and it doesn't automatically save your work. If you don't hit the save button before you close, you will lose all of your data.

But Soft4X does automatically track your backtesting trades, which is a huge bonus. It also provides a MT4 report for your trades, which is really nice.

Forex Tester 4 is slightly more expensive than Soft4X, when it's on sale. However, it is a much more integrated solution and easier to use, so I feel that it's worth the extra cost.

If I'm only considering value for money however, Soft4X is the better choice.

Data Availability

1. Forex Tester 4
2. TradingView (paid)
3. TradingView (free)
4. Soft4X
5. MetaTrader 5
6. NinjaTrader 8
7. ThinkTrader

Forex Tester's data service allows you to download data from multiple brokers, right in the software. That alone is a huge time saver because you don't have to search for third party data, then store it on your computer.

However, if there is third party data that you would like to use, then you can upload that into Forex Tester to. It really is the best solution.

TradingView gives you instant access to data from multiple Forex brokers, which is awesome. But you cannot upload your own data, so that's why it's at number 2.

Usability for Manual Backtesting

1. Forex Tester 4
2. Soft4X
3. ThinkTrader
4. TradingView (paid)
5. MetaTrader 5
6. NinjaTrader 8
7. TradingView (free)

Forex Tester still wins in this category. It's a much more integrated solution, it tracks your backtesting trades automatically and it has most of the frequently used indicators.

You can also have custom indicators programmed for you (find a programmer here), and you can even test automated strategies.

Since Soft4X is a plugin to MT4, there are limitations to the software. But since it also saves you from using a spreadsheet to record trades, it's a great option.

Learn about the best Forex Tester alternatives here.

Best Overall Software

1. Forex Tester 4
2. Soft4X
3. TradingView (paid)
4. MetaTrader 5
5. ThinkTrader
6. Tie: NinjaTrader 8 and TradingView (paid)

Forex Tester 4 is still the best Forex backtesting software for manual testing. I can't say that I'm surprised.

However, I'm extremely surprised (in a good way) with Soft4X. 

It has matured into a very viable backtesting option. If you're strapped for cash, or if you aren't sure if Forex trading is for you or not, then it's totally worth checking out Soft4X.

The only caveat to that statement is that I haven't stress tested Soft4X, like I have Forex Tester. I've literally tested tens of thousands of trades with Forex Tester, but only a handful with Soft4X.

In addition, since MetaTrader is phasing out MT4, who knows how long we will be able to use Soft4X, because they don't have a MT5 version yet.

So, if you want the absolute best product on the market, Forex Tester 4 is it. 

Excel

I mentioned in the beginning that I would explain why I've included Excel on this list.

There are certain individuals out there that believe that Excel is the best solution for manual backtesting.

So if you come across anyone that insists that Excel is a good manual backtesting solution, then point them to this post.

Excel can be used for testing some automated strategies.

But it's totally worthless for manual testing. There are no charts and you aren't practicing the mechanics of entering trades. 

Backtesting software can also be used for trading practice, much in the same way that a boxer goes to the gym to train.

Excel cannot be used for that either.

Final Thoughts on the Best Manual Backtesting Software for Forex

Whew, so that's it!

This took a lot of time and research, but it was worth it.

In the end, Forex Tester is still the best software out there for manual backtesting. 

But I'm glad that I also found Soft4X. It's a good software solution that has some drawbacks, but can be a good solution for some people.

I'm just a little nervous that it only works on MT4, when that version is being phased out.

I also found another trading strategy that could have an edge. More testing would have to be done on this strategy, but it looks promising.

Trade well!

The post Best Forex Backtesting Software for Manual Testing (Comparison) appeared first on Trading Heroes.

MetaTrader 5 is a solid automated backtesting platform.

But did you know that it's also a pretty good manual backtesting platform?

In this post, I'll show you how to use this free software to manually backtest your strategies.

This is a great option if you don't want to purchase software like NakedMarkets.

I'll give you all the tools that you need and the exact steps on how to do it.

If your broker only has MT4 available, then It will work in a very similar way.

Why You Should Backtest

Backtesting is an excellent first step in helping you determine if a strategy has an edge or not. Since you can run through historical data very quickly in backtesting, this gives you a lot more data than if you only traded in a demo or live account.  

Testing that might take months or years in demo trading, can be completed in a matter of days or weeks with backtesting.

You can also practice a strategy when the markets are closed, making it an ideal training tool.

So it's extremely beneficial to learn this skill and MT5 is a good software to start with because it's free.

This is the beginning of the roadmap to successful trading. To get a copy of the Trading Success Roadmap, read this post.

Here we go…

Download MetaTrader 5

The first step is to download MetaTrader 5.

You can get the software from your broker or you can download it directly from the MetaTrader website.

It's usually best to get it from your broker, but if you don't have a broker yet, the MetaTrader version will do just fine.

Once you have a broker, you can connect to your broker through the MetaTrader version.

When you get the software from your broker, it's automatically setup for that broker, so it can be a little easier to get started.

Either way, you can get the complete MT5 installation instructions here.

Download Your Data

In order to do a valid backtest, you should have as much historical data as possible.

Over the years, I've tried several backtesting solutions that only allow you to test a couple of years of data.

That's totally useless because you won't have enough trades to make a valid decision about a trading strategy.

So get as much data as you can. To download additional data, go to: View > Symbols

Then select the currency pair that you want to download data for.

After you've selected the pair, click on the Bars Tab.

In this example, I'm going to download the USDCAD currency pair.

On the Bars tab, select the timeframe of data you want to download, then the starting and ending dates of the historical data.

Finally, click the Request button to do the download. I found that I had to click the button several times to get the data.

So if you don't get it on the first try, keep trying.

If you have your own data, then you can upload it with this button.

Once the data is downloaded, you will see it in the window. You can scroll through the data to see how far back it goes.

That will give you the data you to do your backtesting.

You can also find third party companies that provide market data for you to upload into MT5.

Open Your Spreadsheets

Trade Tracker Spreadsheet

Before you get started, you'll need a spreadsheet to record your results. One of the biggest benefits of other software is all of this information is automatically recorded for you.

But if you would like to continue using MT5, then create a spreadsheet with the following columns:

• Open date
• Open time (if day trading)
• Currency pair
• Long or short
• Open price
• Close price
• Stop loss price
• Take profit price
• Pips result
• Pips risk
• Pips to profit target
• % Risk on trade
• Risk multiple result
• $ P/L
• Running balance
• Wins/losses
• Win %

Once you've built your spreadsheet, then move on to the next step.

Backtesting Results Spreadsheet

Next, you should keep a spreadsheet that tracks the results of each of your individual tests.

Be sure to track the following for each currency pair:

• System name
• System notes
• Chart timeframe
• Version
• Test number
• Return
• Win Rate
• Trades

Then create a sum and average in the last two columns.

Keep Your Trading Plan in Front of You

When you're backtesting, it can be easy to deviate from the plan. If you're like most people, you'll start tweaking the strategy in the middle of the test.

I've done this before too, so that's why I keep my trading plan in front of me while I'm testing.

It will keep you on track and ensure that you are sticking to the plan.

You can get a free PDF download of the Trading Plan Worksheet I use here.

Once you have your plan in front of you, it's time to begin your testing.

Start Testing

Now it's time to get started!

First select the pair and timeframe that you want to test.

Next, add any indicators that you'll be using to your chart.

Then scroll your charts back to a point in time that you want to start from.

If you are testing the H4 chart or higher, I would recommend going back as far as possible.

You can usually test all of the data for a Forex pair on a H4 chart or higher.

When testing lower timeframes, you should pick a few timeframes and test on those timeframes only. Pick a good mix of timeframes that have the following characteristics:

• Strongly trending market
• Strongly ranging market
• Neither strongly ranging or trending

That will give you a good idea of how your strategy will perform in different market conditions.

Do the following to scroll back quickly on your chart:

1. Turn off Autoscroll. This will stop the chart from moving to the most recent candle every time price changes.

2. Hit Enter on your keyboard to specify a start date. A small box will appear in the lower left corner.

Enter the date that you want to scroll back to on the chart in dd.mm.yyyy format, then hit Enter again.

You can also manually scroll back to the date on the chart that you want to start from.

Once you have scrolled back to the historical data that you want to start at, then hit F12 on your keyboard to move the chart forward, one candle at a time.

Record Your Results

Every time your setup fires off, place a trade and record it in the spreadsheet.

You don't have to take screenshots at this point because you don't even know if the strategy works or not.

So just keep testing as fast as you can, so you can get as much data as possible.

Creating screenshots will only slow you down.

Review Your Results

Now take a look at your spreadsheet and calculate the following:

• Win Rate (%)
• Return (%)
• Number of Trades
• Maximum Drawdown

This is enough data for now.

It will help you understand if you want to pursue this strategy or not.

If you want to be extra sure, do another round of testing to verify your results.

Sometimes you might be distracted or not in the right mindset when you do a test.

So if you get the same result with a second test, that will give you much more confidence that a strategy has an edge and you should move forward to the next step in your testing.

Test Another Pair

If you're satisfied with the results of a currency pair, then move on to testing another currency pair.

Not all currency pairs behave in the same way, so you can't assume that it will work on other pairs too. 

Some pairs are more volatile than others. Each individual currency is influenced by different economic factors.

You might be surprised at how differently a strategy performs with different strategies.

This is why you need to test each pair individually.

Be sure to record all of your rounds of backtesting on a separate spreadsheet.

Things to Avoid

Here are a few things to be aware of when doing backtesting with MetaTrader 5.

These tips will help you get the most out of your MT5 testing sessions.

Moving Too Fast Through the Charts

When you move too quickly through a chart, there's the tendency to move past an entry point on the chart.

That leads to hindsight bias because you already know what's going to happen.

If you already know how a trade will turn out, then you'll have biased data.

So find the testing speed that will allow you to get a lot of testing in, but also won't give you advanced knowledge of each trade. 

Changing Your Strategy in the Middle of a Test

It's really tempting to start tweaking your strategy in the middle of a test because you see a  new advantage.

But stick with the strategy, or you won't have a valid test.

When you change a strategy in the middle of the test, you won't know how good the original rules really are.

You also won't know how good the new rules are either because you are only doing a partial test with them.

So finish a test with one set of rules. Then create a new test with your new testing idea. 

Otherwise, your testing data is useless.

Stopping Too Early

If you win 10 trades in a row in the beginning of a test, you might be tempted to stop the test and call it a success.

Don't. 

The strategy may have just hit a really profitable streak that isn't normal for that strategy.

Stopping early won't allow you to see the entire picture and can lead to losses later.

Giving Up on a Low Return Strategy

It can be tempting to give up on a test if it's only returning 1% per year.

However, consider what would happen if you compounded that return with multiple pairs or timeframes.

If the strategy has a high win rate, it's certainly worth considering.

You might give up on an otherwise profitable strategy and find yourself jumping from strategy to strategy, when the first strategy would have met your goals.

Don't Keep Testing if the Results are Obvious

On the other hand, if it's obvious that the system doesn't work, then quit and save your time.

For example, if your strategy has lost 80% of the account, then it's probably time to stop.

There's no way you would continue with that strategy in real life.

Forcing the Strategy to Work

People also tend to be too optimistic about a trading strategy.

So they will subconsciously pass on losing trades and only take the winning trades, just to prove that the strategy works.

I was guilty of this when I first started backtesting.

When I reflect back on this, I did this partially because I wanted to get the backtesting process over with (and trade live) and I didn't like being wrong.

I'm not sure why others do it, but those were my reasons. They're very odd reasons in hindsight, because they didn't help me become a better trader.

But our actions aren't always logical and we need to continually reflect on our behavior to progress. 

Conclusion

Although backtesting can be very beneficial, not all strategies can be backtested. Learn more about this limitations of manual backtesting in this blog post.

But if you can backtest a strategy, it's a great way to test a trading idea, get hard data and build confidence in your skills. 

This tutorial will give you a good starting point, be sure to read the Complete Backtesting Guide for more details.

Once a strategy tests well, the Forward Testing Guide will show you how to take your trading strategy into the next phase of testing.

The post How to Do MetaTrader 5 Manual Backtesting appeared first on Trading Heroes.

In this post, I'm going to review Forex Tester 4.

I've been using it for 7 months, enough time to get a good feel for the benefits, the bugs and if it's better than previous versions.

So if you are wondering if Forex Tester 4 is worth getting, this review will give you my opinion of the latest version of this popular backtesting software.

Forex Tester 4 Review Video

If you prefer the text version, it's posted after this video.

Get a discount on Forex Tester 4 here.

Is Forex Tester 4 (FT4) Better Than Forex Tester 3 (FT3)?

Yes.

I was actually still using Forex Tester 2 because Forex Tester 3 was so buggy.

FT3 would create these gigantic testing files that would eat entire hard drives.

Mmmm…hard drives.

That was the deal killer for me.

On top of that, the features in FT3 weren't all that much better than FT2.

So there wasn't really any reason to upgrade from FT2.

But now let's look at FT4…

Benefits of Forex Tester 4

Set Percent of Account Risk

The biggest benefit of FT4, in my opinion, is that fact that you can set your risk to percent of account.

In previous versions, you had to calculate percent risk manually. That was a pain and added an extra step to the process.

I used a spreadsheet to calculate this, but fixed fractional risk really should have been available earlier.

Convert MT4 Indicators to Forex Tester

One of the biggest issues with Forex Tester has aways been the inability to use custom indicators in backtesting.

Forex Tester has been great if you used price action or common indicator strategies. But you were SOL if you wanted to use the same indicators that you used in MT4.

With FT4, you can now automatically convert MT4 indicators to FT4.

There is a small catch however.

You need to have the source code of the indicator to do this.

If you don't have the source code, then you will have to go through the normal process of having a programmer reverse engineer the indicator or EA for you.

See our list of Forex programmers, if you need to find a quality programmer.

EA and Indicator Generator

Forex Tester also provides an online tool called Visual Strategy Builder (VSB) that allows you to create MT4 and FT4 EAs and indicators, without knowing how to code.

The tool is pretty rudimentary at the moment, but it's promising. With a little more work, it could be a very usable tool for creating simple EAs and indicators.

If you need a complex EA or indicator, you should always have it custom programmed.

However, if you just need something simple and you just want to test out a few ideas, then visual builders like VSB are a great option.

I would love to see them develop this tool more. You can read my full review of VSB here.

Backtest Other Markets

FT4 now allows you to backtest stocks, cryptocurrencies, indices and futures…which is fantastic.

I haven't tried backtesting other markets yet, but I will dig into stocks and crypto at some point. I've always found futures harder to backtest because of contract rollover, but it could be a good solution for futures trading backtesting.

Their premium data service for Forex is excellent, I haven't had any issues. 

Downside of Forex Tester 4

FT2 worked perfectly on VMWare Fusion on my Mac.

FT3 didn't work at all.

FT4 kinda works.

After using FT4 on VMWare Fusion for a few days, I noticed that it slowed down to the point where it was barely usable.

I contacted Forex Tester support and they said that it's best to put FT4 on a cheap Windows laptop.

FT4 simply doesn't run well on a Windows emulator.

It's a little annoying that in this day and age, Forex Tester doesn't run on platforms besides Windows. There is definitely room in the market to create a cross-platform or browser-based backtesting product.

Anyway, to solve this issue, I got a Dell Venue 11 tablet, which runs a full version of Windows 10. If you buy it used on eBay or Amazon, a Venue is considerably cheaper than a Surface and much more compact than any laptop.

…and it does the job.

Then I use Remote Desktop to access the tablet and backtest on my Mac.

This is really the only complaint that I have about FT4.

Potential Improvements for Forex Tester 5

Aside from the issue mentioned above, one improvement that would be fantastic, is a better suite of reporting functions, as well as the ability to get reports across multiple backtests.

I would love to be able to run Monte Carlo simulations on multiple backtests and get stats like risk of ruin and max drawdown.

In addition, the interface is dated. They originally made it to look like MetaTrader, so it would be easier to use.

However, I feel like they could do a lot of streamline the backtesting process and break away from the MetaTrader template.

Otherwise, FT4 is a definite improvement over FT3…and FT2. So I finally retired FT2 and I'm only using FT4 now.

To get a discount on FT4, use this Trading Heroes coupon.

Final Thoughts on Forex Tester 4

FT4 is a great piece of software that has restored my confidence in the future of the company.

It works as it should and it finally has percent risk. The data service works without a hitch and the added markets are awesome, even though I won't be using them right away.

If you want a bonus tip, I started using this mini keyboard with FT4, in order to speed up backtesting. This little guy is pretty useless otherwise…but it's brilliant for backtesting with Forex Tester 4.

Set the hotkeys to keys that are close together on the mini keyboard and it makes it much easier to stop, start and move forward/backwards on the charts. Here are my settings…

I also use the following:

• 0 = Close all positions
• P = Move to breakeven

That really speeds up the backtesting process for me.

So that's what I think of FT4. I hope it helped you make a more informed buying decision.

Trading Heroes readers get a discount on FT4. Also be sure to check if they have a sale running because you can use our discount on top of their sale price.

Happy Trading!

Disclaimer: Some links on this page are affiliate links. We do make a commission if you purchase through these links, but it does not cost you anything extra and we only promote products and services that we wholeheartedly believe in. TradingHeroes.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

The post Forex Tester 4 Review (After 7 Months) appeared first on Trading Heroes.

UPDATE: Traders Gym is now part of ThinkTrader. Learn about the newest version here.

I think Forex Tester is a fantastic product.

There's no doubt about it.

But it is not perfect, nothing is I guess.

However, there are some things that could be done to make Forex Tester more user friendly and portable. I still don't understand why nobody has been able to come out with something that will give them some competition.

Well, the folks at Trade Interceptor are sure making a run at it. In fact, they are trying to give both Forex Tester and Metatrader some real competition.

And that's a good thing…for us traders.

So in this post, I'm going to put Trade Interceptor's backtesting product, Traders Gym through it's paces and see if it can compete with Forex Tester 2 as the premier manual backtesting software program. But first, let's take a look at how I would improve Forex Tester.

What I Would Want To See In A Forex Tester Alternative

As I said in the beginning, Forex Tester is already a fantastic product, so I'm kind of nitpicking here. But it hasn't been updated in awhile and this is what I would like to see in a new version.

• Make it compatible with Macs and Linux. Seriously, I don't know many people who use Windows anymore. Microsoft no longer makes relevant technology. I would love to get rid of my Windows XP installation with VMWare on my Mac and the only reason I keep it around is to use Forex Tester.
• Make it mobile compatible. It would be great to be able to take my testing on the road and use it with iOS. I guess a few people use Android too, so there would need to be a version for those devices also. If they could figure out a “handoff” type feature where you could move seamlessly from your laptop to your mobile device, that would be great.
• Make it easier to build indicators and automated systems. Some sort of “easy language” or GUI builder would be great.
• Simplify the interface. I can certainly see the appeal of making the Forex Tester interface look like Metatrader, but there is a better way.
• Step up the analytics. The reporting is still super basic and a couple of the metrics like drawdown doesn't always work correctly. More detailed reports would be super helpful.
• Although paying for Forex Tester was one of the best purchases that I have ever made, free would be great.

So now let's see how Traders Gym stacks up. Can it make for Forex Tester's shortcomings?

The Good Of Traders Gym

Traders Gym is included in the standard installation of Trade Interceptor and is totally free. So that is already a step in the right direction.

It is available for all major operating systems, including iOS, OSX, Android, Blackberry and Windows. That is fantastic!

The iOS version is my go-to charting app on my iPhone. It is so much better than Metatrader on mobile.

Now let's take a look at the interface. I really like how they have stripped it down to only the essential elements. It is easy to understand and you don't have to hunt for the tools you are looking for.

When you compare that to the Forex Tester interface, it looks dated and complex. I haven't even used some of the buttons.

The Traders Gym capability is also available on mobile devices. I haven't tried it yet, but if it works as well as the desktop version, that would be amazing. More on that in a future post.

The Bad Of Traders Gym

Alright, all that stuff looks good, but does it stand up to real world use?

First, let's take a look at the reporting feature. When you click on the Trading Report button, this is part of the report that you see.

It opens in a browser window and has the feel of a Metatrader report, but much less detailed. It is comparable to the Forex Tester 2 report, so there is no real improvement there.

Next, the most important thing to me is the amount of time that I can backtest. As you probably know, you should test a system for as long as possible to figure out its robustness.

This is where a lot of software packages fall short. Forex Tester provided a good amount of free, high-quality data from the beginning and that was one of the biggest selling points for me.

When I dove into the configuration setup in Traders Gym, I found that the maximum testing time is 5 years and 20 days. Although that is what it said on the screen, there was actually only one year of data available for even common pairs like the EUR/USD.

Compare that to Forex Tester, which provides data all the way back to 2001 for all the pairs that they provide data for.

That was the deal killer for me. To me, there is no use in using software that only has one year of data. Any other benefits of the backtesting function would be moot.

Also, there are elements from my last review that still have me shaking my head. For example, there is no way to quit the program by using the standard Command + Q keystroke. You can't even exit via the main menu.

This shows a general lack of attention to detail. Much like the very limited data, these are things that make an otherwise beautifully designed program look amateur.

Conclusion

So the bottom line is that Forex Tester is still the best manual backtesting software for Forex trading. Traders Gym by Trade Interceptor represents the future of backtesting but it is not ready for prime time yet.

The fact that you cannot backtest a significant amount of time is the biggest deal killer for me. It goes to show that free is not always best.

I really hope that Trade Interceptor keeps improving Traders Gym because it is a step in the right direction. Remember that a lot of programs, including Forex Tester and Metatrader were not great in the beginning.

The post Traders Gym Free Backtesting Software: Does It Beat Forex Tester? appeared first on Trading Heroes.

My Trading Problem

I was struggling to take trades that I learned from books and courses. The reason I was nervous pulling the trigger was because I was not confident in how the trades worked or if they would work at all.

But what could I do?

For me the answer was simple, I had to practice and backtest these strategies. However, it was difficult to find a forex backtesting software solution that suited my needs.

MetaTrader is OK for testing automated systems, but I wanted to find a system that would simulate actual market conditions by allowing me to add indicators, step through each candle/bar and take trades as the signals came up.

This what I really needed because it is tough to go back through complete charts and try to simulate what I would have done in a particular situation. Sure, I could use a piece of paper to uncover the chart slowly to simulate the market unfolding, but my arm got tired and it was hard to write down the trades and hold the paper at the same time.

All joking aside, I read about all these famous traders doing a lot of backtesting before trading real money or client money. But how could I do it without paying an arm and a leg?

Other Forex Backtesting Software Solutions

Don't get me wrong, when I was looking around, there were a few really good systems out there for doing backtesting. The trouble was that they either only did automated tests, were really expensive, or had a monthly subscription fee.

I would have been in the hole a several hundred to a few thousand dollars before I was able to come up with a trading technique that would actually start making money.

My Big Ah-ha!

Then I went to a Rob Booker workshop and he told us that he considered himself a full-time backtester and a part-time currency trader.

Many of his most successful students and himself included, were successful because they did a TON of backtesting. Interesting, I might be in the right place…

And as it turns out, I was. He had found this program called Forex Tester and it is how he and his students tested trading strategies to find trading techniques that worked best for them.

I was so excited that as soon as I got home from the class, I downloaded the program.

It definitely lived up to my expectations.

Here are just a few of the benefits of Forex Tester 2:

• The program is very affordable – It is just a one time fee, NO monthly billing. At the time of this writing, it only costs $199. I wouldn't be able to even buy the historical data for other programs or other subscription based forex backtesting software programs would only allow me to backtest for 1-2 months for that amount of money. Update: I've worked out a discount for you to get a $20 off coupon, if you use this link.
• You can add your own custom indicators (you can either find them online, program them in or find a programmer to do it for you)
• You can see multiple time frames individually or you can have multiple time frames up at once.
• You can get free, high quality historical data to test with directly from their website.
• The program allows you to not only have multiple windows open with different time frames in the same currency, but you can have multiple windows with different currencies.  This will allow you do test for market correlations or practice hedging techniques.
• You can save your testing projects for review later.
• After you are done testing, you can double click each trade in the history log and the program will automatically move the chart to that trade. You can then scrutinize your trades and find any common elements that can make you more profitable.
• You can try this forex back testing software for free before you buy.
  
• You can write notes on every trade so you can go back later and sort your trades by type.
• You can export your trade log for analysis in Excel or any other program.
• Automatic upgrades when new versions are released.
• The program keeps a running total of several important metrics like: largest winner/loser, winning percentage, max drawdown, etc.
• And much more!

The best part about this software is that now I don't have to take someone's word that a trading technique works, I can test it for myself.

How Do You Actually Backtest?

I got this question quite a bit, so I decided to create a free course on how to do backtesting. Fortunately, Rob's course taught me everything I needed to know about getting started backtesting, but I realized that other people would not have the benefit of that instruction.

Some of you are probably wondering WHY you should backtest. Here is a video showing you why. They are both 1 hour charts on the AUDJPY:

As you can plainly see, backtesting will give you much more practice than sitting in front of the charts for weeks or months.

There is no replacement for actual live trading, but backtesting can give you the confidence to take (and stick with trades) and an idea if the method you are trading has a chance of being profitable or not.

Testing your strategy is not a holy grail that will make you a better trader overnight, but it can help you a lot.

The post Forex Backtesting Software – Forex Tester 2 Review appeared first on Trading Heroes.