This method shows good results for forex scalping experts and general purpose expert advisors. This method is also suitable for training of expert advisers based on forex neural networks.

Introduction to Backtesting

Backtesting is a process of optimization of trading system on the basis of historical data in order to check the behavior of the system during the specified time period. A lot of modern trading platforms support backtesting. We successfully use metatrader with build-in tester/optimizer for this purposes.  Thanks to this method traders can easily test effectiveness of their trading strategies without any risk to lose funds in a trading account. You can use backtesting to test not only simple systems (performance of moving average crossover on historical data) but also more complex strategies, which have many triggers and inputs.

If you can measure an idea then you can use backtesting to test it. Sometimes investors and traders employ experienced programmers in order to make a testable form of their ideas. A programmer uses proprietary language of the trading platform and creates so-called “tweakable” systems, which allow traders to change or input some variables manually. In case of moving average crossover system you can input lengths of the two moving averages. Then you can use backtesting in order to test moving averages lengths on the historical data. It will help you to find the lengths which would have performed the best.

Work on Optimization

Most trading platforms like a metatrader also give you an opportunity to optimize a system. You simply enter a range for the specified input, and then the best input will be found automatically by a computer. You also can use optimization with multiple variables when two or more variables are combined in order to find the levels, which would have led to the best results. For instance, you can enter the inputs, which you would like to use, in the program, and they will be optimized to their ideal weights given the tested historical data.

Often backtesting shows amazing results when an unprofitable system suddenly becomes very profitable and successful forex trading system: you only need to do some optimizations. Of course, the trading system is profitable on the past data, and if you tweaked your trading system in such way, it would perform badly during real-time trade. The system looks good, but because of such excessive optimization it brings profit only on paper.

Curve fitting is when you use analytics of optimization in order to create the maximal number of winning trades, which were the most profitable; here you take the historical data, which were used during tests. Backtesting results may look very impressive, but your system still will be unreliable, because curve fitting results are true only for that particular time period and data.

When you want to evaluate your trading system, you can use optimization and backtesting, which give you a lot of benefits. However, these tools are only a part of the whole process. Next you should test your system on a new historical data, which has never been used for tests before.

In-Sample Data against Out-of-Sample Data

When you perform tests of your system on historical data, it is always useful to “save” some time period of historical data, which will be used for other testing purposes. Generally, there are two types of data: in-sample data and out-of-sample data. In-sample data are the data, which were initially used for tests and optimization; out-of-sample data are the data, which have been saved. Saving data for further tests is very important for the process of evaluation. Therefore, you provide yourself with data that have not been used before in the optimization model. So, out-of-sample data will not influence your system and you will be able to find out real performance of your trading system. Simply said, you will see the possible behavior of your system during real-life trading.

Before starting any optimization or backtesting you should save some amount of the historical data, which will be used for out-of-sample testing. For example, you can split the historical data into three parts and set one part aside for out-of-sample testing. Then you should use only the remaining two parts of the historical data (in-sample data) for the initial testing and optimization. As you can see on the Picture 1, one-third of the historical data on the time line is set aside for out-of-sample testing, and the other two parts are used for the initial testing as the in-sample data.

The order of data placement on the line isn’t quite typical: as a rule, the out-of-sample data stands not in the beginning of testing, but right before the forward performance.

As soon as you’ve tested your system on the in-sample data, you can continue the process and apply the system to the out-of-sample data. It is done in order to give you an opportunity to compare the results of system performance on in-sample and out-of-sample data.

Correlation is the process of finding likenesses between the trends and the performances of in-sample and out-of-sample data. Almost all trading platforms allow you to compare reports about performance of your system, created during tests. If the correlation between the data sets is high, then it is quite possible that your strategy will be successful and will show good results during forward performance tests and real-time trade.

If correlation between two data sets is insignificant, like on the left chart, there is high probability that the system won’t work well during real-time trade because of over-optimization. In case of strong correlation (the right chart) you can proceed and perform additional test referred to as forward performance test.

Introduction to Forward Performance Testing

Forward performance testing is another tool for testing performance of your system. This set of out-of-sample data is often called paper trading, because all operations are executed “virtually”. During forward performance testing a possible situation in a live market is simulated, and the system works according to its parameters and logic as if it traded live. It means that any profit, loss, entries, and exits are recorded, but no real operations are performed. Remember: it is very important to follow the logic of the system as precisely as possible, or you won’t be able to evaluate forward performance testing results. You should honestly specify all trade entries and exits without any exceptions and without any explains. Only in this case you will be able to evaluate the system properly.

Many brokers have an option of opening a virtual trading account, which you can use for practice: open trades, calculate profit and loss, etc. This account allows you to test you system without threat of losing real money.

In case of good correlation between all data sets your system is ready for using it for a real trade.

Conclusion

Backtesting is a very useful and powerful tool, which you can find in many trading platforms. Separation of the historical data into several data sets gives you efficient and useful tools for estimation of your trading system. After optimization of your system you should check its viability, using data that haven’t been used before. Before starting a live market trade you should perform out-of-sample and forward performance testing in order to be sure that your system is profitable. Good correlation between all data sets increases chances of success of your system during actual trading.

BJF Trading group inc.

http://iticsoftware.com

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There is a wide array of forex trading tools that are now available available today for both professional and amateur traders. But there are still many who prefer not to use any of the forex trading programs for some reason. So if you haven’t made up your mind yet, here some of the advantages as well as the disadvantages of the metatrader.

Let’s talk first about some of the advantages.

1.     It has the ability to use various currencies. That is why traders all over the world utilize this program.

2.     The servers can actually store huge quantity of historical data that is usually used for backtesting.

3.     It requires user authentication and has high security as well.

4.     You can even incorporate other applications on the metatrader while using it.

5.     The charting and the information that it will give you are based from real time events.

6.     The functionalities are meant for ordinary forex users as well as brokers.

7.     The interface is available in different languages.

But just like any other programs there are still disadvantages if you would solely rely on the forex trading programs alone for all your trading needs.

1.     Since there are guidelines that would be based on the preferences of the user, the strategies of the program will be based only from these guidelines. Therefore, there is not enough flexibility compared to the strategies that you can have if you trade manually.

2.     The program cannot react immediately to the events or the news which can decrease or increase the value of the profit.

3.     Because of the convenience that users get, they just rely everything on the program rather than use the traditional strategies used when investing in forex market.

4.     The limited rules that the user defines may not help in getting the amount of gains that they expect.

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Forex Metatrader has plenty of indicators built within the system. Also, you get to develop your own trading strategies with the Metatrader. Many traders consider this platform as the best one out there due to the fact that it has several features that really help in every trader’s activities. You can test your strategies here once you have coded it in the Expert Advisor, which is on the historical data of the platform. For instance, in simulated testing, you can make sure that your trades are being performed well because of they are vividly displayed on the charts and are provided with testing reports.

What is great about Metatrader is that you do not have to be an expert just to access the platform. It is user friendly and can be very versatile and flexible. You can use it no matter what your trading style is and whatever ready made forex software you will use while trading in this financial market. This platform also allows you to analyze quotes and even make trades even if you are not present during the transaction.

You can find and download from the Internet the Expert Advisors, indicators, scripts, libraries and other things that you can use in the MT4 platform, which are all readily available for the forex traders. The other software that you can use, if not available on the Internet can be bought or are available from professional Metatrader programmers.

MQL4 or the MetaQuotes language 4 is the built in language used when you will develop trading strategies for the system. If you understand C++, you will be able to use this effectively. This language permits the trader to create automated programs, which is often the Expert Advisors. You can now trade automatically with the help of your trading system.

Another advantage that you will like is that you can trade almost anytime you want wherever you may be. This is because you can now trade with just your mobile phone you’re your Personal digital Assistant (PDA). Make sure you are connected to the Internet via GPRS or WAP so that you can access your trades without interruption. This mobile trading is comparable to the typical trading terminal using computers. They have the same features and capabilities and thus, you get the same efficiency level even when you are not in your office or at home.

Metatrader 4 has indeed revolutionized the way traders deal with the forex market. We all know how risky it is when you are involved with this equity market. Therefore, you have to be prepared and with the help of the forex Metatrader, there is no doubt that you will increase gains while reducing your losses.

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Oftentimes dubbed as the trading robot, Metatrader scans the market constantly so that a trader will be able to make the right decisions that will lead to making money. Now, based on the predefined rules, the system will then execute the transaction on behalf of the day trader. Therefore, it is easy to conclude that this system is important to the trader especially when he wants to make the most out of his trading deals.

With an uptime of one percent, the system will provide all the potential functions that are required in helping the user grasp just what forex is all about. You do not have to be an experienced trader to use the platform. With its very friendly user interface, even a beginner will understand the whole system in a matter of minutes. This is an intuitive system and you can choose between PDA and desktop versions. Your broker can offer you with the Metatrader data, which is a real time data that pertain to the charting software as well as the other related facets such as screenshots.

Metatrader is not only used in forex trading but also in futures and CFD markets. There are probably over a thousand brokerage units around the globe that make use of this platform when they are trading. The trading interface grants sharp technical analysis along with the expert opinions that are quite useful for the trader himself. Apart from this, you can make your own trading strategy and you can expect that you will do well with it because there is a program that will guide you during the process of the development.

If you download Metatrader, you will know that this system will make it easier for you when you perform the trade particularly if you have assigned a set of predefined rules that will define what the system should do. Now, the process will not be on your hands alone and this is especially helpful since there are times when you may experience inconsistency in the emotional behavior.

Metatrader is a complete system which includes all the important components including Market Analysis, which determines what currency you should buy and what you should sell, Position Sizing, which states how much you should spend and sell and Entry, which tells you when you should make the purchase or the selling. Also included in the platform are the Stop feature, which tells you when it is time for you to get out of the current losing position and Exit, which states when you should escape on the winning position.

Traders like you love the idea of having an automated system that will help them perform the trades and in making decisions. Thus, quite a number of people are always going for the system since this is believed to be the best one out there. When you download Metatrader, you will really be glad to have made that choice since this is will not require you to be in front of your computer just to make the trades. Because this has made it possible for traders to perform transactions using mobile operable with Windows mobile and Palm OS, it is like you get instant connection no matter where in the world you may be. Practice Trading With a Free Metatrader 4 Demo From FXCM. Click Here

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A forex Metatrader is a complex trading platform that is designed to provide services to their customers by acting as the broker for Forex, CFD and Futures market traders. This platform is a whole cycle center. This means that there is no need for you to purchase any other available software out there just so you will be bale to organize the broker services for your business. The Online Metatrader 4 platform consists of a server, administrator, data center, manager and the mobile or client terminals. The server is the kernel of the system all of the queries that you have entered flood down to it. What the server does is to get the queries so that it can give you news and quotations and also for the fulfillment of the operations as well as for placing orders and trade execution.

When it comes to the administrator, this part of the platform enables the server to perform remote administration. The data transfer between the two is encrypted by 128-bit keys so you can be sure that the data you have entered is safe and protected at all times. The administrator is responsible of several jobs. These include controlling and managing the user groups and the rights settings. In addition, it also configures the financial securities list as well as the data feeds and the database backup operations. On the other hand, the data center is the connecting link between the clients’ and system server terminals. Most of the time, this is used to eliminate the association the client terminal and the main server. The manager is the one that processes the trade operations and the trader’s accounts. With this, you can access different terminals such as the risk-managers, dealers and account managers.

With the mobile program is similar to a full function terminal for trading. The difference here is that you get full access to the financial markets and even make deals no matter where you are. You can download Metatrader 4 mobile for free to test it or you can opt to buy it. This program supports thirty technical indicators including the Alligator and the Bollinger Bands. You also get sound alerts so that there is no need for you to watch your PDA every now and then just to know that there are changes in the market.

As for the client terminal, this is created so that it can provide technical analysis and trade operations in real time mode. Its key features include different execution technologies such as Instant, Request and Market Execution and this also provides online news coming from the financial markets.

The Metatrader platform has a friendly user interface so that you will be able to use it easily and effectively.

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Metatrader 4 or MT4 is an online platform that is designed to help traders and institutions to deal with forex, CFD and others. So, if you are a serious trader who wants to gain more money then you should only choose a forex robot, which is solely derived from the MT4 platform such as the MT4 Expert Advisor. If you are completely new in the world of forex, you can make use of a demo account for a month or two so that you will be familiar with the environment. Usually, these MT4 programs come with a 60-day guarantee for your money so when you are not satisfied with the results, you can simply give the package back to the manufacturers.

Once you have acquired your software, you can now go trade live with the other traders using your real money and not just the one you have used in the demo account. This is where everything starts. You may gain lots of profits if you have a great strategy and it will really help if you have a great Metatrader expert advisor. You may wonder what the deal with this MT4 EA is since you can do the trading for yourself anyway. However, you have to sit in front of your computer monitor for several hours everyday so that you will be able to watch the important events that are taking place in the world of forex and all the other major news. Everything is in your hands. Thus, you do not have enough time to spend with your family, friends and even to yourself.

A Metatrader EA will give you enough time so that you will be able to dedicate more attention to your kids and even your hobbies. This is what most traders want since they also need some time to sleep and rest their minds so that they will feel refreshed and not stressed out the next day. The MT4 platform offers to do almost all of your tasks when you require it do so. You can visit sites such as the http://iticsoftware.com which will guide you in choosing the right software for a trader like you.

Regards,

Boris

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You can place several metatrader indicators or copies of one metatrader indicator, but with different parameters, in one window. View -> Navigator. We open the metatrader indicators menu, click on the necessary metatrader indicator by the left mouse button and drag and drop it in the metatrader indicators window. This method is quite approaches for indicators, which have an identical scale (for example, 0-100): Stochastic, RSI, etc.

The transaction from history on the chart.

View -> Terminal -> Account History. Click on the order, drag and drop it on the chart of the same instrument (if you drop it on the chart of another instrument, it will be substituted by the chosen one).

The order is displayed in form of arrows of opening and closing the order; it is connected by a section of trend line. Levels of Stop Loss and Take Profit are displayed on one vertical axis with open price.

If you drag and drop the order, pressing the “Shift” key, the whole trade history of this instrument (believe, it is very demonstrable) will be displayed on the chart.

Fast transition over the schedule.

You can use the fast metatrader navigation line for convenient positioning of the chart on necessary time (very convenient to use in full-screen mode, F11).

Disable auto scrolling of the chart. Press “Blank” or “Enter”. Write necessary value in the fast navigation line and confirm it by pressing “Enter”.

[time (hours:minutes)]
example: 12:00
[date]
example: 14.01.2007
[date] [time]
example: 14.01.2007 12:00

Symbol and period of the chart are changed in the same way.

[instrument]
example: FDAX
[period]
example: M15
[instrument],[period]
example: FDAX,M15

Arrangement of instruments in the metatrader terminal window

It is convenient to group charts in the metatrader terminal window (for example, yen pairs, metals, oil and gas, grain, etc.). If you opened many charts in your MT4, you can group them. In order to do it you should click on the instrument name by the left mouse button (below, where all open instruments in the form of a horizontal line are situated), and then drag and drop it in the necessary place on this line.

Metatrader Quotes window

By pressing F10 you open metatrader quotes window, those instruments, which you see in the “Market Review” window.

If you mark the item “Always on top” in the menu of this window, you can track quotes constantly, having moved them somewhere in a corner, so that the window doesn’t hinder work with other programs. The font and color gamma can be changed in the “Properties” contextual menu.

Metatrader Standard template

In order to make so that each new chart in the metatrader terminal is opened according to your options and preferences (color, indicators, type of chart, and so on) you should do the following. As a matter of fact, adjust those preferences and save the received template (Charts -> Template -> Save Template) as default.tpl.

Metatrader Lot size

By default, there are 13 variants of lot size (from 0.01 to in drop-down menu at setting up an order. It does not mean you cannot choose the desirable lot. You should only edit the value according to the size you want to have, or to set defaults in options (Service -> Options -> Trade).

Crosshair

Press the middle mouse button or the combination of keys “Ctrl+F” for fast activation of the “Crosshair” object. This property can be very useful in full-screen mode.

Ruler

It is a very useful tool. You can quickly see the distance in points and the number of bars between two points on the chart. Activate “Crosshair” (press the middle mouse button), click in the necessary point by the left mouse button and move the crosshair to the second point. Numbers in line indicate the following: the number of bars / the number of points / bid in the second point.

Order modification

Double-click on the order in area, where stop-loss or take-profit is specified, for fast order modification, when the “Trade” tab is opened. Double-click in other area of the order will open the “Buy by market” window.

Market review – fast addition of instruments

In order to add an instrument in the “Market Review” window quickly, you don’t have to open the whole list and to search among hundreds of forex pairs, futures and shares. You just need to double-click in empty area, type a symbol manually in the appeared window, and press “Enter”. The instrument is in the list.

Close a part of position

You don’t have to close the whole position; it is possible to close the position only partially. In order to do it you should click on the “close position” item by the right mouse button, and type the size of a lot, required for close, manually.

Compression of the chart vertically

For this purpose you should move the mouse cursor to the right, in the area where price is shown, until the arrow becomes bidirectional. Grab the price and drag it downwards. Compression functions on all timeframes of the chart. Double-click in the area of price will return the chart in initial state.

Types of passwords in MT4

There are two types of passwords in MetaTrader: the password of trader (the main password) and the password of investor (viewing of open positions, account history, and balance without the rights to trade).

Distinctive features of the investor’s password: idle F9 key; the terminal does not react on clicking on positions; there are no items for controlling positions in the menu of the right mouse button on the “Trade” tab.

Change of trader’s password

Menu -> Service -> Options, the “Server” tab. Press the “Change” button, fill the “Current Password” field in the opened window, and also type the new password twice in corresponding windows below. The window is closed after pressing “Ок” at successful change of the password. If something is done incorrectly (for example, only one kind of symbols, mistake at repeated input of the new password) the terminal will not react and the window will not be closed. The password can be changed only when there is a connection to the server; the option does not work without connection to the network.

Change of investor’s password

The procedure is the same, but radio button should be set in the “Change the investor’s password” position.

Trailing stop

It works only when there is connection to the server. Trailing stop is activated only when the profit exceeded the given value; it will move after the price on the specified distance until the price makes retracement and closes position. The order with activated trailing-stop is marked by the “Т” letter in the left corner of the line in the “Terminal” window.

How to make a copy of line

For example, to draw the channel, it is enough to draw a trend line, double-click on it and drag it, holding the left mouse button and the “Ctrl” key. The received duplicate will be parallel to the basic line (well, almost parallel, there will be curvature on seniors timeframes; it is incurable “disease” of the Metatrader).

Chart picture

In order to save the current chart in form of a picture, you should choose the “Save as picture” item in the menu by the right mouse button, and then to choose required values from the offered ones.

Cancel of object removal

If you have accidentally removed any important line, don’t be upset. You just need to press “Ctrl + Z”, and this line will be restored.

If you have accidentally closed a chart with a full set of options, you can restore it from the menu File -> Open deleted.

Best regards,

BJF Trading group

http://iticsoftware.com

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Market review

Read article: How to Select the Right MT4 Dealing Firm

Right after installation, the Metatrader terminal often does not shows all instruments, accessible for trade, but only some. If you want to see the full list of possibilities, you should click the right mouse button and choose “Show all symbols” in the “Market Review” window.

Here, in the “Market Review” window, we can also change the arrangement of trading instruments in any desirable way. We just grab any currency or futures by the left mouse button and move it in the beginning of the list.

In order to reduce traffic, it would be better to remove unused symbols from the market review (there can be hundreds instruments, accessible for trade, and MetaTrader downloads quotes for each instrument). “Market Review” -> “Hide all symbols”. So only those instruments, on which charts are opened or there are open positions or pending orders, will remain in the review.

By choosing the “Symbols” menu, we can manually add in “Market Review” only those trading instruments, which we are going to use (double-click on the necessary instrument or by clicking on the “Show” button for the chosen instrument or the whole group). By the way, here we can see the time of trade and the expiration date (the date of change of delivery month under the futures). By pressing the “Properties” button, we can also get some additional information: margin rate for opening and maintenance margin rate, spread size for futures with spread, size and value of tick; and for forex instruments – size of spread and swaps rate.

You can remove a symbol manually: just click on it by the left mouse button and to press the “Delete” button (or choose the corresponding item in the contextual menu by the right mouse button).

In order not to keep all used symbols in the market review, you can divide instruments into groups and switch between groups whenever you want (for example, forex, futures, indexes, shares, etc.). You just need to hide all spare symbols and save the set.

Traffic saving: disable news in the terminal (Tools-> Options -> remove the tick in the “Enable News” line)

BJF Trading Group

http://iticsoftware.com

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1 Open Metatrader 4
2 Add Metatrader Expert Advisor to the chart
3 Press F6. Tester window will open.
4 Press “Expert properties” and select “Imputs”
5 Press “Load”
6 Select Metatrader Setting file and press “Open”

Loading metatrader Setting File for Trading.

7 Open Metatrader 4
8 Add Metatrader Expert Advisor to the chart
9 Press F7. and select “Imputs”
10 Press “Load”
11 Select Metatrader Setting file and press “Open”

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On the other hand, there are many other argue that although prices may come into view to be arbitrary. In fact the patterns followed by them are really in terms of trends. By using fractals many traders can also determine such trends in one of the most basic way. Fractals help us to make the large and complex trends into simple and small and reversal trends by breaking them down.

Many people do not know what actually fractals are and how can they help us in increasing our profit. We will tell you all of these things in this article.

What are Fractals?

A chaos theory and many abstract methods came into mind when many people think the fractals in mathematical sense. While this concept is totally different from it, this concept is totally applied on the market because this concept is a nonlinear and self-motivated system. Many people also have some other different idea about fractals they think it in a more truthful sense and that sense means as chronic patterns. With the help of these chronic patterns we can predict reversal among larger, more disorganized price movements.

pic.1 Metatrader Fractal Indicator

Five more are there which are poised in these basic fractals. There are some rules by using which we can easily identify the fractals. These rules are as follows:

When there is highest high in the middle and two lower highs on each side there is an occurrence of a bearish turning point.

When there is pattern in which the lowest low in the middle and two higher lows in each side it means there is an occurrence of a bullish turning point.

It is very much necessary for the fractal to be valid that the basic patterns should remain unbroken even many other less perfect patterns can occur.

If are not into reversal for two days then fractals can not be drawn and it is the biggest drawback of fractals as fractals are covering indicators. Many more bars are last by most significant reversals, so most of the trends will remain unbroken.

Applying fractals to FOREX trading

In the forms of analysis or in conjunction with other indicator many indicators are used but fractals are the best indicator ever used. An alligator indicator is an indicator which is used with fractals is a most common used indicator. All buy rules are only valid if below the “alligator’s teeth” and all sells rules are only valid if the above alligator’s teeth this is stated according to the standard rules.

But there is a major drawback also to the system and that drawback is large swings which takes the more space. On the other hand, to produce a huge amount of profit we can use infinite techniques with the fractals.

BJF Trading Group

http://iticsoftware.com

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