New Backtest
Running a backtest on the Forex market includes three main steps:
General
Signal
Strategy
General
In this step, general configurations of the backtest are set. These configurations include:
Name: The name given to the backtest
Market Data: The market data for which the backtest will be run
Symbol: The symbol for which the backtest will be run; Note that unlike Stocks/Crypto backtests, you can only select one pair for each backtest.
Symbol Options: Symbol-specific options including Contract Size, Spread, and Digits.
Timeframe: The timeframe in which the backtest will be run
Time Range(s): The period(s) of time that the backtest will be run for. Users can either use time ranges defined in Time Ranges section of the Tools menu or define a time range by clicking on Open Time Range Manager
Balance: Initial balance of the strategy
Leverage: The leverage of the account that you want to deploy the strategy in
Description: Users can optionally add a short description to the backtest
Signal
In this section, long and short entries and exits are defined. Long Entry is the signal that opens long positions. Long Exit closes long positions. Short Entry and Short Exit signals open and close short positions, respectively.
Long Trade: When turned on, long trades are enabled.
Short Trade: When turned on, short trades are enabled.
Strategy
Money and risk management settings are configured here.
Position Size
The size of the position and steps that the strategy opens in the Pip unit
Martingale Pyramiding
When turned on, the strategy uses martingale pyramiding to mitigate the risk. This involves opening multiple positions to reduce the average purchasing price in buy and increase the average purchasing price in sell positions. To read more about pyramiding and martingale, read here.
Multiplier: Martingale multiplier. the size of each step is Multiplier times larger than the previous step.
Minimum Allowed Margin Level: Margin level is the result of dividing the account's equity by its margin. The unit of this parameter is percent. When the margin level reaches 100, all positions will be liquidated because the total worth of the bets is equal to trading capital, and you can not go any further unless you pay off your debts. You can set higher margin levels for the backtest to avoid liquidation. For example, if you set Minimum Allowed Margin to 400 and the backtest engine wants to add a step, it first checks if opening the new position will not result in your margin account becoming less than Minimum Allowed Margin and if this condition is met, the next step will be added.
Cooldown: The price must at least move Cooldown number of pips in the opposite side of the position's direction to add a new step.
Reference: The reference for calculating the Minimum Allowed Margin Level; if you use last, it is calculated with respect to the price of the last entry, but when the average mode is used, the average price of all previous entry prices will be used as the reference.
Max Allowed Step: The maximum number of steps allowed
Stop Loss
This is the stop loss order of the position. The stop loss is entered in pips. Only positive values are allowed. When pyramiding is used, the stop loss is defined with respect to the average price of the initial buy and added steps.
Take Profit
This is the take profit order of the position. The take profit is entered in pips. Only positive values are allowed. When pyramiding is used, the take profit is defined with respect to the average price of the initial buy and added steps.
Equity Risk
Equity Risk is introduced to avoid substantial losses in trading. Equity risk monitors the equity of the strategy and if it reaches certain levels, it closes all positions to avoid further loss of funds.
Equity Risk Type: There are three methods to define an equity risk. When Absolute, the loss of the account is entered in dollars, and if the total loss of the account reaches Value dollars, all positions will be closed. In Balance PCT mode, the maximum allowed loss is defined as the Value percent of the strategy's balance. For Initial Balance PCT, the loss is defined as the Value percent of the strategy's initial balance.
Value: This field is used to enter the maximum allowed loss in dollars or percentage with respect to Equity Risk Type.