Best Trading Backtesting Softwarefasrsin

Final Thoughts on the Best Manual Backtesting Software for Forex. Whew, so that's it! This took a lot of time and research, but it was worth it. In the end, Forex Tester is still the best software out there for manual backtesting. But I'm glad that I also found Soft4X. Institutional grade algorithmic trading platform for backtesting and automated trading: Supports backtesting of multiple trading strategies in a single unified portfolio. Supports dozens of intraday and daily bar types. Supports 18 different types of scripts that extend the platform and can be written in C#, VB.NET, F# and R.NET. Dedicated software platform for backtesting and auto-trading: Best for backtesting price based signals (technical analysis), supporting daily/intraday strategies, portfolio level testing and optimization.

  1. Best Forex Backtesting Software
  2. Best Trading Backtesting Software
  3. Trading Backtesting Software
  4. Best Backtesting Software For Trading
  5. Stock Trading Backtesting Software

Risk Disclosure:
Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure:
Hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

As you probably know, I've been a big fan of Forex Tester, almost since the beginning of this site.

But curiosity started to creep in…

Is there something better out there?

I've been using Forex Tester because it works well, so I didn't have the need to look for other software solutions. But I believe that it's always a good idea to periodically review what you are doing in life and in trading, and make upgrades…when it makes sense.

So I decided to revisit the Forex backtesting software landscape this year and take a good hard look at all of the viable options out there.

Maybe there's something that's better, and at a cheaper price. If there is, then I would love to recommend it to my readers as a better solution…or at least a viable alternative.

To that end, I researched all of the manual Forex backtesting software solutions on the market and tested them with the same trading strategy.

SEE ALSO:Learn the RSI Divergence trading strategy that works

Learn what I discovered, in this video:

Shortcuts to Sections

Rules for this Challenge

I wanted to test trading products that would be affordable for most traders, so here's the criteria I used:

  1. The software can be purchased for less than $200 total (for one-time downloads), or less than $200 per year (for subscription products)
  2. The software must be able to be used for manual backtesting
  3. The software must be able to backtest the Forex market

From there, I'll backtest a trading strategy that I know nothing about, then reveal the results.

Actually doing the backtesting will reveal a lot about the software.

The Challengers

Based on the criteria above, I rounded up the following challengers:

  • Forex Tester 4 (paid, one-time)
  • Think Trader, formerly Trade Interceptor (free)
  • Soft4X (paid, one-time)
  • MetaTrader 5 (free)
  • TradingView (free and paid, subscription)
  • NinjaTrader (free)
  • Excel (paid, one-time)

You might have a few questions about these products, so I'll clarify my choices.

Yes, the regular price of Forex Tester 4 is $299. However, they frequently have sales where you can get it for less than $140, which qualifies it for this test.

You might think that Excel doesn't belong on this list. I'll explain why I've included it in a bit.

I'm using the Pro version of TradingView, which is currently less than the $200 per year minimum. If you upgrade to the higher plans, then you would be over $200 per year. The price might go up in the future, but it currently qualifies, as of the original writing of this post.

The Categories

Here are the categories that I'll be judging these software solutions on:

  1. Overall ease of use
  2. Value for money
  3. Data availability
  4. Usability for manual backtesting
  5. Best overall manual backtesting software

Alright, now that we have that out of the way, let's take a look at the strategy that I'll be testing.

The Trading Strategy

I've never tested moving average crossovers because they didn't make sense to me. My belief was that as soon as two moving averages cross over, you've already missed the easy part of the move.

…or so I thought.

…but what if they really do work?

I'm willing to keep an open mind, until I get conclusive proof.

That's why we test.

So I approached this like a new trader and I Googled:

“moving average crossover strategy forex”

The first legit-looking search result that came up was from the DailyFX website.

When I clicked on the link, I was taken to the site with the trading strategy “rules.” This strategy was a perfect test because it's traded on the daily chart, so I could test it quickly.

The entries and exits are fairly straightforward, so you can test it too and verify my results.

…and it also highlights a few key weaknesses in most of the free trading education on the internet.

You can see the original strategy here.

According to the blog post, the following are the “rules” for the strategy. I use quotations because what I found wasn't a complete set of rules.

For future reference, the title of the post is: “Learn Forex: Trend Trading Rules with Moving Average Crosses.”

This is something important to pay very close attention to. Most of the blog posts, YouTube videos and free eBooks on the internet aren't giving you the rules for a trading strategy.

They are giving you trading ideas, guidelines or concepts.

Ideas are a good start, but too many new traders think that this is a complete strategy, don't test it, and fill in the blanks with their own rules.

…and they wonder why they lose money.

Guidelines From the Post

Anyway, back to the DailyFX guidelines. Here's what I gathered from the post:

  • Use the 50 and 200 moving averages, I'm assuming the simple moving average
  • When the 50 crosses over the 200, then enter in the direction of the crossover
  • Set the stop on the other side of the 200 SMA
  • Trade this on the daily chart

Notice that there are key elements missing from this trading plan.

What I Added

Here's what I had to add, to make this a complete trading strategy. I added as little as possible, to make this a tradable plan. There are other tweaks that I would ordinarily make, but let's start simple.

  • Risk 1% per trade
  • Take profit when price closes on the other side of the 50 SMA
  • Set and forget, no adjusting of the stops or take profits once the trade is entered

Now we have a complete strategy.

Remember that most trading “strategies” out there aren't really strategies because they are missing a lot of key definitions. You can use this worksheet to define a complete strategy.

Finally, I'm going to be testing this strategy only on the EURUSD. Since I'm going to be testing this strategy many times with different data sources, this will also give us a very good indication of if this strategy works or not.

Example Charts

It helps me to have a visual of how this strategy works. So here are a couple of examples on a chart.

Here's a long example:

A short example:

Testing Results

Once I had a trading strategy to test, I started testing it on each software product. I also tracked the time that it took to test the strategy, so you can make software decisions based not only on cost, but on time savings.

You can see complete recordings of the tests in the video at the top of this page.

Here's a breakdown of the results from each test.

ThinkTrader

  • Win rate: 39%
  • Return: 16.7%
  • Number of trades: 23

Learn more about TT here.

NinjaTrader 8

  • Win rate: 50%
  • Return: 38.4%
  • Number of trades: 32

Learn more about NT8 here.

MetaTrader 5

  • Win rate: 46.1%
  • Return: 33.6%
  • Number of trades: 26

Learn more about MT5 here.

Best Forex Backtesting Software

TradingView (paid, Oanda data)

  • Win rate: 47.1%
  • Return: 34.4%
  • Number of trades: 21

Learn more about TV here.

Soft4X

  • Win rate: 28%
  • Return: 61.8%
  • Number of trades: 25

Learn more about Soft4X here.

Forex Tester 4

  • Win rate: 33%
  • Return:15.2%
  • Number of trades: 21
Backtesting

Learn more about FT4 here.

SEE ALSO:Forex scalping secrets revealed (full interview)

TradingView (free, FXCM data)

  • Win rate: 38.6%
  • Return: 24.9%
  • Number of trades: 102

Testing Analysis

So all of the tests were profitable, but they had different results. Still, I would say that this strategy has an edge.

But you may be wondering why the results were so different between the different software products.

Let's take a look at why this could be and how this affects your confidence in backtesting results. Read left behind series free online.

There are several reasons why the results could have been different:

  • The data is always different from broker to broker and maybe that's just how it worked out.
  • Since I only tested once per software program, I might have made some execution errors. This is why it's important to test more than once.
  • There may have been some settings that were different between the platforms.
  • The number of trades was relatively low, so maybe the averages haven't had time to work out yet.

This difference in results also brings up an important point. You should test with data from different brokers and currency pairs, to see how robust a strategy is.

Backtesting software that only allows you to use 1 or 2 data sets won't give you the full picture of how well a strategy works.

But overall, this strategy was profitable across the board. So if this strategy interests you, it might be worth checking out.

Be sure to test it a few times with different data feeds before moving it into forward testing.

Forex Backtesting Software Rankings

Testing Efficiency

Before I get into the rankings, I'll share with you my efficiency rankings.

I measured the efficiency of each software in days of historical data tested, per minute of backtesting time.

According to this measure, Soft 4X came out on top.

But remember, faster isn't always better. You can miss trades when you go too fast.

I actually like the fact that Forex Tester 4 has a reasonable top speed, so you don't overshoot trade entries. In the end however, it's up to you to set a speed that works for you.

Since this was a simple and straightforward strategy, I could go really fast.

On this other hand, if this were a more complex strategy, I would predict that I would have to go slower and the efficiency rating would be very similar across the board.

Data is data however, and those were my results for this strategy.

Now that I had a chance to try all of the backtesting platforms, here are my final rankings. I'll also give you some analysis on why I chose the top two in each category.

If you want to hear the complete analysis of all the lists, watch the video at the top of this page.

Overall Ease of Use

Best Trading Backtesting Software

  1. TradingView (paid)
  2. Forex Tester 4
  3. MetaTrader 5
  4. ThinkTrader
  5. Soft4X
  6. TradingView (free)
  7. NinjaTrader 8

TradingView is such a pleasure to use. You can use it on almost any device with a browser and you don't have to install any software. That's why it's my favorite charting and trading platform.

Forex Tester 4 is second because it's very well integrated, but it still only works on Windows, which is frustrating. You can also download a lot of different data feeds from within the program, making it much more useful than the other software on the list.

Value for Money

  1. Soft4X
  2. Forex Tester 4
  3. ThinkTrader
  4. MetaTrader 5
  5. TradingView (paid)
  6. NinjaTrader 8
  7. TradingView (free)

Soft4X is currently under $100 and the best value for money. It provides 2 data download sources built-in, which is good enough for most people to get started. You can also upload your own data into MT4, if you want to test with data from other brokers.

The only downsides to Soft4X are that it's little clunky and it doesn't automatically save your work. If you don't hit the save button before you close, you will lose all of your data.

But Soft4X does automatically track your backtesting trades, which is a huge bonus. It also provides a MT4 report for your trades, which is really nice.

Forex Tester 4 is slightly more expensive than Soft4X, when it's on sale. However, it is a much more integrated solution and easier to use, so I feel that it's worth the extra cost.

If I'm only considering value for money however, Soft4X is the better choice.

Data Availability

  1. Forex Tester 4
  2. TradingView (paid)
  3. TradingView (free)
  4. Soft4X
  5. MetaTrader 5
  6. NinjaTrader 8
  7. ThinkTrader

Forex Tester's data service allows you to download data from multiple brokers, right in the software. That alone is a huge time saver because you don't have to search for third party data, then store it on your computer.

However, if there is third party data that you would like to use, then you can upload that into Forex Tester to. It really is the best solution.

TradingView gives you instant access to data from multiple Forex brokers, which is awesome. But you cannot upload your own data, so that's why it's at number 2.

Usability for Manual Backtesting

  1. Forex Tester 4
  2. Soft4X
  3. ThinkTrader
  4. TradingView (paid)
  5. MetaTrader 5
  6. NinjaTrader 8
  7. TradingView (free)

Forex Tester still wins in this category. It's a much more integrated solution, it tracks your backtesting trades automatically and it has most of the frequently used indicators.

You can also have custom indicators programmed for you (find a programmer here), and you can even test automated strategies.

Since Soft4X is a plugin to MT4, there are limitations to the software. But since it also saves you from using a spreadsheet to record trades, it's a great option.

Trading Backtesting Software

Best Overall Software

  1. Forex Tester 4
  2. Soft4X
  3. TradingView (paid)
  4. MetaTrader 5
  5. ThinkTrader
  6. Tie: NinjaTrader 8 and TradingView (paid)

Forex Tester 4 is still the best Forex backtesting software for manual testing. I can't say that I'm surprised.

However, I'm extremely surprised (in a good way) with Soft4X.

It has matured into a very viable backtesting option. If you're strapped for cash, or if you aren't sure if Forex trading is for you or not, then it's totally worth checking out Soft4X.

The only caveat to that statement is that I haven't stress tested Soft4X, like I have Forex Tester. I've literally tested tens of thousands of trades with Forex Tester, but only a handful with Soft4X.

Best Backtesting Software For Trading

In addition, since MetaTrader is phasing out MT4, who knows how long we will be able to use Soft4X, because they don't have a MT5 version yet.

So, if you want the absolute best product on the market, Forex Tester 4 is it.

Excel

I mentioned in the beginning that I would explain why I've included Excel on this list.

Stock Trading Backtesting Software

There are certain individuals out there that believe that Excel is the best solution for manual backtesting.

So if you come across anyone that insists that Excel is a good manual backtesting solution, then point them to this post.

Excel can be used for testing some automated strategies.

But it's totally worthless for manual testing. There are no charts and you aren't practicing the mechanics of entering trades.

Backtesting software can also be used for trading practice, much in the same way that a boxer goes to the gym to train.

Excel cannot be used for that either.

Final Thoughts on the Best Manual Backtesting Software for Forex

Whew, so that's it!

This took a lot of time and research, but it was worth it.

In the end, Forex Tester is still the best software out there for manual backtesting.

But I'm glad that I also found Soft4X. It's a good software solution that has some drawbacks, but can be a good solution for some people.

I'm just a little nervous that it only works on MT4, when that version is being phased out.

I also found another trading strategy that could have an edge. More testing would have to be done on this strategy, but it looks promising.

I'll be posting my results in the TraderEvo Program.

If you want to learn how to do these tests and move from backtesting to forward testing to live trading, take my free Quikstart Course.

Trade well!

You Might Also Enjoy