Forex Tester – Back Testing Software Review
Forex Tester is an invaluable piece of software for any trader that gives an environment to simulate the Forex market. This software permits investigation into the performance of a trading system on past market data. Both discretionary and automated systems can be tested with Forex Tester.
Many new traders ask the following questions…
- How do I test a forex strategy?
- Is there such a thing as Forex training?
- Can I practice forex trading?
- How do I know if a trading strategy works?
- What is the best forex trading strategy?
Forex tester 2 (current version) enables traders to test strategies away from the pressures of live trading with the Forex simulator software and enhance their trading skills or test an automated forex strategy without risking any real money on the markets. This can minimise the potential for initial losses that traders often experience when going live.
This Forex back testing software can be used as an initial proof of concept for any trading strategy you plan on using. Demo-trading is also useful but can take months to gather any useful statistical data. Forex tester allows traders to select the time of day they want to test, and can run at various different speeds while progressing through historical market data. This enables you to cover lots of back testing with minimal time and effort.
There is an integral list of numerous indicators to select from; developers can create new indicators utilising the Forex Tester API. This list of technical indicators including RSI,MACD,Bollinger Band and many others has grown into quite a collection over time.
One of the main benefits of Forex Tester, in my opinion, is that it captures your trading history and provides statistics including your max drawdown, trades per day etc which are a great reference when looking for a fit for purpose forex trading strategy that suits you.
There are two versions of Forex Tester
- Lite version – This version is mainly for manual testing and does not utilise the automated functionality.
- Pro version – This provides a list of testing templates and affords testers the power to save and reload preceding testing strategies.
At the time of writing, the pro version costs $135 which is pretty reasonable for what is on offer. You can try a demo of both versions but this only allows for ten minutes worth of back testing before the software resets. You can’t save any results of previous tests in demo mode. It is also worth noting that the demo version only allows testing of one months worth of history data.
Two main modes are provided within Forex Tester
- History mode
- Testing mode
A basic overview of the modes. In history mode you can import historical data – much of which can be downloaded from the Forex Tester site. After the historical data is loaded you can proceed to testing mode. Testing mode is where the main “hands on” functionality comes into play. It gives the capability to simulate buying or selling via different order types.
I always test any new strategy with forex tester before risking any cash. I would rather dismiss ineffectual ideas before going live.
Think about it. If you need to validate a trading strategy which opens positions on a weekly timeframe. How long is is going to take to fine tune this strategy? Months of forward testing? Years? Forex Tester helps traders test strategies in hours and there is no need to be tied to the computer at fixed times of the day. You can test whenever suits you.
The Forex Tester back testing software is definitely worthy of investigation if you are serious about your trading.