Table of Contents

・ What is backtesting

・ Advantages

① You can decide for yourself whether to deploy the obtained EA in real trading

② You can optimize the parameters yourself

③ You can become more knowledgeable about the EA and its logic

What is backtesting

Based on historical price movement data,

you can verify the behavior of the EA.

It can be performed for free with MT4’s standard features.

Backtesting is performed using MT4's "Strategy Tester"

Advantages

① You can decide to use or not use it by yourself

Whether the obtained EA is safe

You can determine for yourself without being swayed by hype or claims

whether it is really usable EA.

For example, suppose you obtained an EA advertised as “explosive profits with no drawdown since 2021 for two years.”

When you perform backtesting yourself,

let’s say there was a drawdown in 2020.

The market conditions from 2021 onward without drawdown may not guarantee the same conditions in the future.

If at least the market conditions return to those of 2020,

there is a possibility of drawdown, so you can decide to stop or continue on your own.

If in the past there were periods with drawdown,

there were market conditions that you could not adapt to,

instead of trusting what others say and running the EA,

being able to decide for yourself to run or not run is a very meaningful thing.

② You can optimize parameters yourself

First, after doing backtesting in (1) and there is a drawdown,

you may not give up immediately.

Check whether the EA can have its parameters changed.

How adjustable the parameters are depends on the EA.

Parameters include,

things related to money management such as lot size and maximum number of lots held,

entry conditions,

exit conditions,

and so on.

If these exist,

by performing backtests

you may be able to optimize the EA's parameters yourself.

Examples of EA parameters (vary by EA)

Also,

Don’t just take what the EA provider says at face value;

perform backtests yourself,

and make judgments based on the results, which is very meaningful.

③ You can become more knowledgeable yourself

And finally, perhaps the greatest benefit is this.

After running backtests on several EAs,

and optimizing parameters,

you will become more knowledgeable about the EA and its logic,

and you will be able to create EAs yourself.

I am currently creating my own EAs,

and the initial trigger was to backtest the obtained EA,

which gradually made me more proficient

and able to develop my own EAs.

Based on the above,

conducting backtests of EAs by yourself is

a highly meaningful activity, I believe.

For beginners who think backtesting seems difficult

and don’t know how to do it,

we have written detailed information in another article,

so please refer to that.

“TNA_EA Lab: Mastering Backtesting”