It was only after two to three years of forex trading that I discovered back testing. With a number of back testing software programs being easily available online, you can now test any forex trading technique or strategy with historical data before you put your hard earned money on it. In fact each and every successful forex trader today back tests his or her strategies and if you also want to check out whether your current strategy is going to earn you money or deplete your bank account, then make sure that you run it through a back testing software.
However, if you think that you can pick up just any back testing software and verify your technique, then think again. There are hundreds of back testing software packages available nowadays and choosing one that works for you will require a little thought and research. You want to know what to look for when you buy your back testing software? Here is a small list of the basics that you need to check before you buy a back testing program:
Is It Compatible With Your Trading Program?
The kind of trading you do will be the first deciding factor when it comes to selecting back testing software. This is because different back testing programs work differently. So, if you are one of those people who check out charting software and signals and place trades manually, then you will need to ensure that the back testing software that you are buying can also do the same. On the other hand, if you are writing your own code or using a fully automated signal software that places trades automatically, then your back testing software should allow you to test your techniques by writing your own programs and testing your system without any human intervention.
Does It Include All The Indicators That You Use?
Back testing programs are available for everyone ranging from the beginner to the expert. If you are somewhere high on the learning curve and land up with a program that does not even let you process some of the indicators that you use in your techniques, then it is a crushing experience. So make sure that you buy a back testing software that not only has a wide range of technical indicators, but one that also lets you add indicators for free.
Will It Work With Your Data Base?
Historical data is available in different formats, and not all formats run on all back testing packages. So you will need to ensure that the package you are buying is compatible with the data base that you already own or are planning to use. A good way of doing this is to download a trial version of your back testing software and run your data through it before your buy the package. This is especially pertinent if you are buying a low cost back testing software that does not come with its own data source. High end back testing packages generally give customers access to free online data.
Does It Provide Storage And Learning Tools?
Not every back testing software program available in the market will let you store your testing results for future reference and analysis. However, if you do not have a photographic memory, then you will benefit more from a software that lets you save the back testing results of different techniques and strategies for comparison, analysis and improvement than from one that comes without these feature.