Is the spread reasonable?

This is Geko-.

One of the items you must not miss when deciphering the backtest of an FX automated trading system (EA) is the “spread.”

The spread refers to the difference between the selling price and the buying price when trading FX, and how it is set varies depending on the FX broker.

For example, please look at these two images.

These images show the real-time spreads (the ! parts) on the same date and nearly the same time, set by two different brokers.

Even when you compare the “!” part of USDJPY, you can see a difference of “22” and “11.”

(unit is “points,” pip value is points ÷ 10)

Since the spread is the difference between the selling price and the buying price, it can be considered a kind of trading fee, and the narrower the spread, the more favorable the trading.

Now, returning to the discussion of backtesting,

you can specify the spread when performing a backtest.

When you open MT4’s “Strategy Tester,” you should see a display on the right side as shown above.

By entering a value in the “Spread” box in this image, you can specify the backtest spread.

With that, you can achieve the following.

This is a backtest image of a certain EA.

And next is this one.

This is also a backtest of the same EA as before.

The period and the EA are the same, but only the “spread” is different.

That’s right.

Just changing the spread can make the EA’s performance completely different.

Therefore, when interpreting backtests,

checking whether the spread is appropriate

is an essential item to verify.