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Pros And Cons of Forex Metatrader 4 Demo and Back-Testing

Pros And Cons of Forex Metatrader 4 Demo and Back-Testing


Pros And Cons of Forex Metatrader 4 Demo and Back-Testing

by Steve Via

When checking a trading system to see how effective it is, you have to demo and back test it. In essence, you're looking at strategies that worked in previous years to find out what will work now. By the same coin, whatever didn't work in the past will likely do the same thing now.

There are pros to using back testing and demo-ing to review a system.

1. Detecting patterns in history. The back-test can reveal patterns that work or don't work.

2. In order to maximize potential, investors should learn important quotients like max draw-down so they have an understanding of the program.

3. Knowing how a system preforms allows an investor to have more assurance when a draw-down period hits. In other words, an investor will know when sticking to the trading rules will be in his/her best interest and when he/she should forget about using the trading system.

4. Looking at the historical trends through back-testing produces a general idea of the rise and fall of the trade.

Downfalls of Utilizing Demo-ing and Back testing

1. Variability of Spreads

Worldly circumstances sometimes create fluid situations which diminish the ranges. Fluid situations will vary the ranges between GMT day and night. These fluctuations are not always reported when doing research before bidding at a certain price.

As a result, a strategy that mandates particular max spread conditions may preform better in back-testing than it will in live trading.

2. GMT Difference

Depending on where you live, you might experience time jumps due to daylight savings time and other time jumps, which can affect your trades. Your charts can then be thrown off in terms of the time they are supposed to act. As a result, you have to readjust your strategy in order to avoid mismatched prices.

3. Agent Influence

Agents will use demo-ing and back testing to present the best possible option. Live trading does not reflect such perfect scenarios. Agents manipulate the data to make their skills more appealing, thereby attaining more customers. The Internet has a wealth of information regarding forex forums.

4. Method of Entering Trades

A system that utilizes market order to make entries may find that it is difficult to get the proper price requested when in live trade conditions. In truth, in live trading conditions, the marking price is constantly changing, making it very difficult to make a manual trade at a specific price. Entry prices in back tests or demo tests will vary from that of live conditions.


Identifying the pros and cons of demo-ing and back-testing offers us the opportunity to review and determine which program stands out among the rest. All this information does not indicate that the tried-and-true method of back-testing is obsolete.

About the Author:
Learn more about FAP Turbo. Stop by Steve Via's site where you can find out all about Forex Nuke and what it can do for you.

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