What is the backtest spread? What is the expected gain?

When performing a backtest, we set a spread.

And since expected profit is also important, we discuss that as well.

■ What pips spread are you backtesting with?

…This is very important. If it’s not at least as wide as the spread on the live account, there will be no reproducibility.

In addition, in the morning the spread tends to widen, and

it widens at economic data releases.

There are times when the market becomes thin and the spread widens as well.

There are times when it widens even if you don’t know the reason.

Considering these, you must backtest with a comfortable usual spread plus a little extra, and it must show a rising trend to the right.

▲ For USD/JPY, it must be at least 1.0 pips or more.

The spread used in backtests (5) is 0.5 pips, but

an EA built with that may place entries in backtests,

but in live trading the spread may widen more and the entry may not be taken,

and thus reproducibility is lost.

※ In addition, also check the expected profit.

…The expected profit is the net profit divided by the number of trades.

If this isn’t high, you’ll lose to the spread!

It’s better to have at least 2.0 pips in pips terms.

If you don’t take these into account, you may make short-term profits in live trading, but

in the long run you will diverge more and more from the backtest as you trade.

The appearance of backtests is important, but

it’s crucial to discern the above points.