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Backtesting an algo in ProRealTime™

Description

To backtest an algo is to test how the algo has performed historically. The backtest can give you valuable insights to the performance and nature of the algo, to help you with your money and risk management. It's always recommended to run a backtest before starting any algo. It's also recommended to investigate what the average spreads are for that index for the trade hours of your algo. Spreads and overnight fees are often underestimated.Please note that backtests can be easily manipulated and overly optimized to show great historic results but leading to a significant risk of underperformering when starting the algo live. It's also important that you understand that historic results are no guarantee for future results.



1. Opening up the correct chart (timeframe + index)

1) Find the instrument name for the algo you want to test. The list belows shows you which instruments the different algos run on for a international IG account.

Please note that instrument names, currencies and contract sizes can differ depending on the country of your trading account


Algo instruments and position sizes



2) Search for the instrument in ProRealTime(Click to open up a chart of that instrument)
















3) Change the timeframe of the chart to the timeframe intended for the algo (see list above)




















4) Change the number of units of the chart(The number of units of the charts changes

The number of historic candlesticks shown in the chart and consequently changes the time period of the chart and the time period of your backtest ) Most ProRealTime accounts have access to maximum 200 000 units of historic data.



















2. Running the backtest

1) Click on Indicators




















2) Go to Backtesting & Automatic trading and select your algo
















3) Optional: Change backtest settings by clicking Modify
















4) Optional: Change position size, spreads, initical capital etc























5) Click ProBackTest my system


(If you haven't changed settings. Default settings)
















(If you have changed settings)


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