5 Easy Steps to Test “Forex Trading Robot” For Beginners
You may have heard the term “forex trading robot”. All brokers around the world who use the MetaTrader (MT4) Forex trading platform usually activate this feature.
Our Analysts often get questions about how to test Forex trading robots on the MT4 platform. There are actually two ways of testing; Backtest and forward test. Backtest means testing a robot by running it in the MetaTrader simulation feature called “Strategy Tester”. This test method uses data of price movements that have occurred in the past. While the forward test is to test a robot “live”.
Because the forward test method is quite time consuming, traders usually use the faster backtest method. This time, we will discuss 5
easy steps to test Forex trading robots for beginners with the backtest method.
How to use MT4 and how to install EA
Before we start, make sure you already know how to use MT4 and how to install the EA or Forex trading robot. How to install forex trading robots to MT4 is very easy. You just download the robot you want. You can get it on the internet or maybe given by your friend. The robot program file will have a .mq4 or .ex4 extension. If the robot name for example is “Forex Trading Robot”, the program file will have the full name RobotTrading.mq4 or RobotTrading.ex4.
Then you just have to find the folder where you installed your MT4 program (for example on drive C; the name of the folder is IM Futures Trader). Still in the same folder, look for the “MQL4” folder. In the “MQL4” folder, you will find the “Experts” folder. Now, save your robot file in the “Experts” folder.
If so, then do the first step, which is to open the Strategy Tester. The trick can be by clicking the “View” button, then selecting “Strategy Tester”.
Steps to use a strategy tester on the MT4 platform
You will see a panel that appears at the bottom of your MT4 platform. The next step is to choose the robot you want to test. This is the second step.
The third step is to choose the currency pair that you want to trade using the robot. You also have to choose “time frame” or “period” of the time you want.
You can also choose the time range you want to use to test the robot. To do this, you must first check the “Use Date” selection box, then you can choose what date, month and year in the selection next to the “Use Date” box. For example if you choose “From: 2013.02.01 To: 2014.02.01”, that means you will use the data recorded in that time span (from 1 February 2013 to 1 February 2014).
You also have to make sure that your price movement data is complete enough so that the complete quality of your data is not less than 90%. This is to avoid the existence of several charts that “disappear”, as if there is a gap but actually not. To do this, you can press the “F2” button on your keyboard. This is the fourth step.
Then in the window that appears, double-click on the currency pair that you will use to run the backtest. You also have to check whether the time frame you selected is in the database. If it’s not there, click the time frame then click the “Download” button at the bottom.
The next step of strategy tester
It is advisable to include a 1 minute (1 Minute / M1) tick data so that your backtest results become more accurate. Only, this step will take up a lot of space on your hard disk. Based on experience, some robots will likely cause MT4 to crash or not be able to run.
If you have enough price movement data, then you can run the backtest. Next, step five is to click the “Start” button, then let the program run by itself.
After a few seconds, or minutes, or even hours (depending on how long the time span you choose and the ability of your computer), you will be able to see your backtest results in the “Graph” or “Result” tab in the Strategy Tester panel. But you need to remember that these results are based on the performance of the robot “in the past” and do not guarantee that the robot will provide the same results in the future.
On another occasion, we will discuss how to read the backtest results to find out the quality of the robot you are testing.