Find The Best Forex Simulator Software In 2022
Backtesting is one of the most crucial steps in becoming a successful forex trader. Knowing your strategies inside out with actionable metrics is what sets profitable and unprofitable traders apart. You can use software to simulate years of trading data in just hours and massively fast track your trading experience. We have compiled a list of the worlds leading Forex Backtesting Software Providers.
1. Soft 4 Fx
Soft 4 Fx is the most well known manual backtesting software in the forex industry. The lightweight tool bolts on to MetaTrader and allows you to use historical data to actually enter trades in the market and track your statistics. The metrics provided in the strategy tester are extremely valuable and allowing you to enter trades instead of paper trade means you will get completely objective results. Soft 4 Fx works with all trading strategies, time frames and pairs. It’s clear to see why it’s the industry favourite! Have a read of my full review here, looking at the pros and cons of the software.
2. Forex Tester
Forex Tester is one of the worlds leading forex backtesting tools. Used by over 50,000 traders, the solution allows you to go to any point in the historical data, analyse, trade, fast forward and look at your trading data. It’s actually been described as a video game for traders. I’d highly recommend Forex Tester if you’re looking to backtest the markets! Click here for my full, in-depth review of the platform.
TradingView, everyones favourite charting tool, has a backtest feature. TradingViews’ paid version allows traders to go back to any point in the historical data and trade, candle by candle, up to present day. The tool is absolutely brilliant for technical traders looking to test strategies and refine their edge.
4. MetaTrader 4
MT4 is actually one of the best tools for backtesting your forex trading strategies. MT4 comes with a built in strategy tester, that allows you to attach EA’s and run past data to test all of the metrics of the strategy. The free MT4 strategy tester will show you the profitability, drawdown, profit factor, streaks and much more!
Microsoft Excel is actually one of the best tools for backtesting the forex markets. This will require you to manually backtest on another platform but by logging your backtest results in a spreadsheet, you’ll be quickly able to make adjustments and see patterns in your trading performance. Although it’s a bit old school, you can’t beat a simple sheet of data!
6. Trend Spider
Trend Spider allows traders to backtest data without any coding knowledge. The easy to use platform allows for any pairs, any timeframes and any strategies making it a useful tool for your trading toolbox. With over 20 years of historical data to test from, it’s clear to see why Trend Spider is an industry favourite!
Quanthouse is an institutional level backtesting tool for quant and EA traders looking for huge amounts of backtest data. The tool allows traders to run algos on years of historical data in minutes with QuantHouses Historical Data On Demand functionality. Although an amazing tool, for the majority of retail traders this level of data is going to be overkill! However, for algo traders, definitely worth checking out!
Choosing A Forex Backtester
When choosing a tool to help you backtest the forex markets, there are a lot of factors you want to consider. Although backtesting is, in essence, a very simple process, the quality of the data is extremely important. If anything is going wrong during the backtesting process, your results are going to be completely wrong and this could lead to huge losses in the live markets.
I actually know a trader that would be able to generate mind-blowing returns on their backtesting software. In the live markets, he couldn’t even hold the breakeven mark. This was all due to the way he was backtesting data.
Let’s take a look at all of the important factors…
The cost of your forex backtesting software is very much an important factor. Backtesting, if done properly, doesn’t need to be done frequently so you don’t want to be paying a huge amount of month each year to have the tool just sat in your toolbox gathering dust…
Soft4Fx – Soft4Fx sells for around $99 for 2 licenses. I have personally used this for many years and I would say that the value for money is very much there. The years this tool has taken off my learning curve was very much worth the $99, in my opinion.
Forex Tester – Forex Tester ranges from $299 for the lowest package, to $898 for the largest package. For the majority of retail traders, the $299 will be more than good enough for all of the backtesting needed.
TradingView – TradingView comes in very cost effective at just $14 per month for the package needed to backtest. I have been a paying customer of TradingView for years and I wouldn’t say I have ever needed to pay for a higher tier package than this.
MetaTrader 4 – MT4 is completely free to use! You can either download it directly from MetaQuotes or through your broker as the large majority of brokers will offer a white label MT4 platform to traders.
Excel – Most people will already have access to Microsoft Excel so I’m counting this as completely free. If you don’t and don’t want to use a free alternative like Google Sheets, the cost is going to be around £100 for a license to just Excel.
TrendSpider – Trendspider isn’t cheap and comes in at $33 per month for the premium version, ranging up to $97 monthly for the master version. For most traders, the $33 monthly version should be more than good enough to deal with simple backtests!
QuantHouse – QuantHouse is institutional grade quality and the price points are not available on the website. I would definitely say that if you’re a retail trader or hobby trader, this is not worth exploring and something smaller scale would suffice.
Efficiency And Ease Of Use
When it comes to backtesting, you will ideally be gathering hundreds if not thousands of samples to analyse. The issue with this is the simple fact it can take a huge amount of time to actually complete a backtest task. Even to very experienced traders, a large data task can write off a week of trading hours. This is why efficiency is extremely important in your backtest tool…
Soft4Fx – Soft4Fx is extremely user friendly once setup. There’s really not much to it and it’s extremely simple to use. You’re able to speed up candles, run EA’s and even export your trading data at the end, which can then be analysed making it extremely efficient.
Forex Tester – Forex Tester is one of the most user friendly tools for backtesting the markets. With all data, charts and features built in, you’re literally ready to go within a few minutes and can get through a huge amount of trading data in just hours.
TradingView – TradingView is efficient in some aspects and lacking in others. Opening trades, skipping to certain dates in time etc is all done very well and it looks very pleasant. However, you’re not able to track data or analyse your trades from the platform, so you’ll be needing to manually record all trades made, doubling the time needed to complete a full test.
MetaTrader 4 – MT4 is surprisingly user friendly and intuitive when it comes to backtesting. Using the strategy tester you can test years of data in just minutes and get P/L graphs, in-depth data and the ability to export everything to a spreadsheet. The data quality isn’t the best sadly, but the efficiency is great!
Excel – It goes without saying that with Excel, you aren’t able to take trades. Therefore, you have to use Excel to document trades taken using one of the other backtesting solutions. For instance, using TradingView to execute trades and Excel to track the data is one of the best ways to do a backtest in my opinion.
TrendSpider – Trendspider is very efficient when it comes to backtesting. With the lack of coding knowledge needed and the built in features, it’s extremely quick to get through a whole backtest task.
QuantHouse – QuantHouse is not going to be too useful for most traders, unless you have a large amount of AI’s running within the markets. I would advise staying away as you won’t need this level of detailed data, nor would it be cost effective or efficient.
Reviews - What Are Traders Saying?
If you’ve been a reader for many months, you’ll know that whenever we are ranking and delving deeper into tools we really like to take a look at the opinions of other traders. Just because I may have a great experience with a prop firm and get paid out on the same day, doesn’t mean that this is the treatment all traders are getting around the world.
Forex Tester – Forex Tester has some great reviews on ForexPeaceArmy and traders are very happy with the product, which is great to see!
TradingView – Hundreds of thousands of traders around the world use TradingView for their trading. TV has hundreds of reviews online, with the majority being shown here on Trustpilot!
MetaTrader 4 – MT4 does have a huge amount of coverage from forex traders around the world. MetaTrader doesn’t have glowing reviews on Trustpilot but this is mainly due to the fact that most of the platform is outdated, slow and useless. However, the Strategy Tester is great!
Excel – I don’t think anyone is questioning the authority and reputation of Microsoft Excel. However, here are over 16,000 glowing reviews of the product on Capterra!
TrendSpider – TrendSpider doesn’t have too many reviews on popular review sites around the world, which is slightly surprising. Regardless, here is an in-depth review from Ross at Warrior Trading breaking down everything you need to know!
QuantHouse – As Quanthouse is not really geared towards retail traders, there are no reviews online of the offering.
How Often Should You Be Backtesting?
I try to stay away from paid subscription models when it comes to backtesting because you won’t need to be doing a whole lot of backtesting. The idea of doing a successful backtest is that you gather a HUGE amount of data and can analyse this data without needing to go back and complete another backtest.
I would advise doing a backtest of at least 500 trades. This may take you 2 months of data, or 15 years depending on the trading strategy you’re trying to test. Unless you are trying to completely change your strategy and attempt something brand new, you won’t need to repeat this test ever again. If you realise that, for instance all of your AM trades are losing, you could just filter the AM trades out of your spreadsheet to get your new win rate without having to go back through all of the data again.
What Pairs Should You Be Backtesting?
With the help of the best backtesting tools listed above, backtesting is a very quick process. With that in mind, you should be backtesting all of the currency pairs you have access to. I have traded strategies previously that perform very well on EURUSD and GBPUSD, but don’t have any sort of profitability on EURCHF and EURCAD. You have absolutely no way of knowing this though unless you dedicate your time to a full backtest of the strategy on all of the currency pairs your broker offers.
What Is The Point Of Backtesting?
Backtesting is very important. If not, the most important thing you can be doing as a retail trader. I’m sure you’ve seen it hundreds of times, someone investing a few thousands that they really cannot afford to lose, into a strategy they don’t even know is profitable. They lose their money very quickly, get greedy, invest more and lose more. They then cry that forex is a scam, right?
The reality is that most trading strategies do have a very small edge over the long term (years). Traders get a few weeks of drawdown and lose all faith in their strategies because they have actually tested them. However, if you knew that in the last 10 years your strategy has made 50% per year on average, with 16% drawdown, you would still have complete faith in your strategy even if you were down 8% in drawdown.
Not only is backtesting important from a psychology point of view, it can allow you to tweak aspects of your trading. Let’s say that you take a few trades per month on the JPY during London open. What if you’re not profitable in trading purely because these trades, out of session, are losing 90% of the time and completely changing your overall win rate? How would you know this? Well, from backtesting and analysing the data.
The Most Important Step In Manual Backtesting
Backtesting is only worth doing manually if you are honest about the results. This is a huge mistake new traders make every time they do a new backtest. It’s great that you want your results to be better but by not counting losing trades, or lying about the risk management, you’re actually making your trading results much worse in the live markets and costing yourself years of progress, just to get a more impressive backtest.
If you have a really simple trading system using indicators, I would advise using an automated backtest software like MT4 Trading Simulator and completely automating the backtest process so you know that the results are going to be completely free of any bias or human error.