As Forex traders, particularly those of us who trade on technical analysis, our most important resource is information and time. Information because we base our decisions on the information we have available and time because we understand that patterns are due to develop as time passes by. That is why we do back testing on out systems to determine if they are profitable or not. If you are a beginning forex trader you may ask yourself why you need to do this. Can’t we just trade on a demo account first to test our systems?
Well, we can do that, but several factors rule against it. First of all few traders have the time available in their otherwise busy lives to test a new strategy on a demo account, much less to wait several weeks before there is enough data to make an informed decision on the profitability of the system. That is why we use back testing software. We can go through historical trading data at exactly the speed we choose and get the same results from a weekend of testing that we would otherwise spend weeks on getting.
Forex trading back testing software can cost quite a bit of money, which may deter some traders, in particular those just starting out. That is a real shame though, as it is really a highly usefull learning tool for both beginning and advanced traders. That is why in this article we will look at a free back testing tool called Forex Strategy Builder.
Forex Strategy Builder is a good visual strategy back tester. It employs a combination of logical rules and technical indicators to simulate the trading in historical forex trading markets. The included automatic strategy builder even allows you to get profitable strategies on autopilot, though I wouldn’t recommend you to only go with those. Well, total newbies may find the feature useful in itself because it actually comes with a detailed explanation after you run it. What it can be used for, by more advanced traders, is to add even more indicators to their existing trading system.
Another useful feature in Forex Strategy Builder is the intrabar scanner. This works to make sure the simulation is a historically accurate as possible by loading in all the time frame data that is available. This way it allows you to check each individual trade inside the bars to really understand the price movement.
There are many more features available for this piece of software and I recommend you check them out for yourself. It is free after all. That is also one of the main winning points for this software in my opinion! I have been using this software now for 6 months and most of the time thats all I need. The back testing is very fast, almost instant calculations and I have more than 50 indicators to choose from. Another thing I like about Forex Strategy Builder is that I have everything available to me on menus, there is no need to manually type in formulas. Are there any cons to this software? Not really as it’s free, but if I must say something, then it is the fact that the documentation isn’t the most user friendly. Other than that I highly recommend this software.