Part 4 Creating the First Forex Strategy – How to Fine-tune Your Strategy (Manual Backtesting)

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How to backtest a trading strategy

When you found an interesting trading strategy (or designed it yourself), you need to check whether it worked in the past before you actually bet your money on it. This process of checking a strategy on the historical data is called “backtesting”.

When you backtest your strategy, make sure that you observe its performance for enough time and during different market conditions (trends, ranges).

There are 2 types of backtesting: manual and automated. The automatic backtesting is done with the help of programs, for example, Expert Advisors (EA) that open and manage the trades for you when certain technical conditions are met. To create an EA, you will need to know MQL4 programming language and syntax. As a result, in many cases, a simpler and more reliable manual testing can turn out to be a better solution.

Manual backtesting of a trading strategy

Follow simple steps

Step 1. Open the chart of a currency pair on which you want to backtest your strategy. It’s best to analyze one pair at a time. If necessary, you can do the backtest on another pair later. Apply the necessary indicators and tools to the chart. Scroll the chart to the previous period.

Step 2. Check the chart candlestick by candlestick looking for setups in line with the strategy you are testing.

Step 3. After finding a trade setup based on your trading strategy, write down the details of the potential past trade. You should write the date, entry point, stop loss, take profit and any other information you find necessary.

Step 4. Repeat the process until you find another possible trade setup and then go back to step 3.

When you have the results of potential trades written (we recommend using Excel), it will be easy to calculate the win-rate of the trading strategy.

If you find that your strategy performs poorly in backtesting, consider changing one variable at a time based on your observations, until you arrive at a profitable strategy.

Manual backtesting of a trading strategy requires time and discipline. However, if done right it will give you a good idea of the strategy’s success rate. Remember that you are backtesting a strategy for your own benefit. In addition, manual backtesting will give you a better understanding of the market and allow you to practice determining entry and exit levels.

It’s important to understand that the market tends to change. So, a strategy that was considered successful by the results of backtesting will not necessarily continue to show the same success rate in the future. This is why every strategy should be accompanied by sensible risk management.

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Forex Backtesting

Learn how to back test your forex trading strategies with MTrading, using the MT4 Supreme editions backtesting software in a risk free environment. This article will show you how to set it up and get started.

Forex backtesting is an important thing for any trader who relies on indicators or different algorithms in Forex and CFD trading. Forex backtesting software is a tool that many traders rely upon. Before we delve deeper into the backtesting matter, let’s remind ourselves of the history.

Main article sections:

Brief history of backtesting software

During the 1980s, Forex backtesting was a bit straightforward. It was the time of paper trading, and they would usually write big notes of their trading results in a note or a log. However, most of the backtesting was done by applying fundamental concepts and few market patterns.

During 1990s traders managed to display their logs and results on a computer monitor. That’s was a huge leap compared to 1980s as it was a breakthrough process. That was the time when Forex testing became easier due to Forex back tester.

Backtesting a Forex system or indicator

A great starting place to begin backtesting is by downloading MTrading MT4 and MTrading MT4 Supreme Edition. There are two core methods for backtesting.

Symbol information indicator

Firstly, the Symbol Information indicator on MTrading MT4 and MTrading MT4 Supreme Edition provides a fast and detailed summary of the market for any given instrument. With the symbol indicator Forex backtesting tools on MT4 is much easier.

This feature enables you to form an opinion providing you with the change, range, and indicators on every timeframe. Using this analysis in conjunction with a detailed database and you are on the road to success.

MT4 and MT4 SE backtest

Forex backtesting software works best if you have a database of prices. Furthermore, having a full history of economic data events could also be built in. Such data is widely offered by many vendors. Typically, it will have the daily low, high, open and closing prices, along with various Forex data for additional backtesting.

MTrading trading simulator, lets you enter the market and pending orders, set trailing stops, define the stop loss and target profit for orders once clicking on the price chart. You can also save multiple order definitions in the form of templates; while also being able to close all open orders quickly. Also, there are many more features that are not available as standard in MetaTrader 4.

Using our strategy tester, we suggest using historical data for testing manual trading strategies. This is how you do it on our trading and backtesting software.

Forex backtesting on MT4

You can open the strategy tester when clicking on the icon or the shortcut pressing Ctrl+R. By selecting the expert advisor MTrading – Trading Simulator.ex4, then you select your trading instrument and the time frame. If you are not sure on the testing model specifically, then select the Open Prices mode. We suggest selecting other settings if you have such experience. Then select your preferred time window, but make sure certain historical data also exists, and enable the visual mode. For the simulation to be more realistic about your goals and situation, select an initial account balance in the EA options to replicate your live account. This can be done by clicking the Expert Properties in the MT4 simulator window and clicking on the Testing tab.

The Forex simulation software gives you the possibility to use the visual mode and speed up the process of backtesting. You need to move the slider to the left or right in regards to the backtesting speed you want to achieve. You can see how it looks in the example below. You can also optimise the EA automatically by clicking the “Optimization” button. If you click on “Modify Expert” you will be able to select different input parameters for testing.

With MTrading Backtesting software you should be able to test both individual strategies and indicators.

MTrading MetaTrader 4 is a popular tool for backtesting Forex strategies because of its default in-built Strategy Tester feature. But keep in mind that while using the right software can indeed be helpful to you in trading, no strategy or indicator will work unless your broker is reliable. Start trading with MTrading and reap the benefits of new software technologies.

Stay tuned! Follow the updates in our Education section.

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

How to build and test a Binary Options strategy with the MetaTrader 4 Strategy Tester

Table of Contents

1. Introduction

This article shows how to build a Binary Options strategy and test it in Strategy-Tester of Metatrader 4 with Binary-Options-Strategy-Tester utility. By default Strategy-Tester of Metatrader 4 can test Expert Advisors and Indicators against historical data, but it cannot handle Binary Options with expire times. As I need a possibility to test Binary Options strategies automated in Strategy-Tester of MetaTrader 4, the Binary-Options-Strategy-Tester was build as a utility to fit those needs.

The concept contains the following parts:

This is a step by step example how to build a Binary Options strategy stored in an Indicator (marked as red in image above) to communicate through Binary-Options-Strategy-Library (marked as green in image above) with the Binary-Options-Strategy-Tester (marked as blue in image above), to place virtual orders and count their results with backtests and forward tests.

Please keep in mind: Backtesting with historical data will never represent the real future, but it might give you an approximate value to get your strategy more stable.
The quality of your backtest will depends on your historical data. Therefore it is strongly recommended to use a set of hight quality data!

2. Installation

Download and purchase Binary-Options-Strategy-Tester utility from marketplace:
Test-Framework to test Binary Options strategies in Strategy-Tester of MetaTrader 4.

Why a purchased version of Binary-Options-Strategy-Tester utility is needed?
A Binary-Options strategy has to call a function of the Binary-Options-Strategy-Tester (via Binary-Options-Strategy-Library) to place the virtual trades. Related to the license concept of MQL4 this only works if the product has a working license. Therefore you have to purchase the product to test Binary Options strategies or this example.

Download free BinaryOptionsStrategyLibrary.mqh and place it in into folder \Include ([path to your MetaTrader 4]\MQL4\Include):
The free library will provide several functions to build your Binary Options strategy easily and to communicate with the Binary-Options-Strategy-Tester. See Binary-Options-Strategy-Library for more details of the library.

Download free KVO.mq4 indicator and place it (and the compiled KVO.ex4 file) into folder \Indicators\Downloads ([path to your MetaTrader 4]\MQL4\Indicators\Downloads):
The KVO indicator is used as an example to show the access of external indicators and there ex4 files in section “3.2.6 Use of external Indicators (ex4 files)”. See https://www.mql5.com/en/code/8677 for more details of the indicator.

Now you can go further with section “3. Binary options strategy example” and build the example code by yourself or just download the code of this example below.

Optional download BinaryOptionsStrategyExample.mq4 and place it (and the compiled BinaryOptionsStrategyExample.ex4 file) into folder \Indicators ([path to your MetaTrader 4]\MQL4\Indicators):
Download the code of this Binary Options strategy example to let it run without building it by yourself.

To compile the needed .ex4 files open the .mq4 files (KVO.mq4 and BinaryOptionsStrategyExample.mq4 – NOT Binary-Options-Strategy-Library.mqh) in MetaQuotes Language Editor and click on button “Compile” or just restart your MetaTrader 4 after these files are stored in the described folders and MetaTrader 4 will do this automatically for you.

3. Binary Options strategy example

The following steps will guide you throgh an example how to build an example Binary Options strategy stored in an Indicator to communicate with Binary-Options-Strategy-Tester. You can build it by yourself or just download the code of the BinaryOptionsStrategyExample.mq4.

Please note: This strategy is not a profitable Binary Options strategy! It is just an example how to build a strategy in an indicator to communicate with the Binary-Options-Strategy-Tester utility. Of course you have to build a profitable strategy by yourself. But as you will see, this utility will help you to test and improve your Binary Options strategy.

3.1 Define Binary Options strategy

First of all we have to define the strategy and the changable values (input parameters). MQL4 documentation shows all technical indicators, which can be adressed over the iCustom interface: https://docs.mql4.com/indicators.

Let us say we like to create a simple Moving Average cross strategy with one “fast” and one “slow” Moving Average to trade on next candle after they have crossed each other. Documentation tells, how we can get the value of a single Moving Average: https://docs.mql4.com/indicators/ima.

Let us further say, we like to choose values for “MA averaging period” (fast and slow) and for “applied price” as well as for the “averaging method”. Other values (like symbol, timeframe and shift) depends on the testcase (e.g. the symbol the tester runs on) and should be set automatically. Therefore we basically need the following variables for a Moving Average:

As we need two Moving Averages to check their crosses, we need the following input parameters for the strategy example with some default values:

3.2 Create Binary Options strategy

You need to build an indicator which stores your Binary Options strategy to drag it on the chart where Binary-Options-Strategy-Tester is running on.

Open MetaQuotes Language Editor (in MetaTrader 4 click on “Tools” -> “MetaQuotes Language editor” or just press F4) and click on “New”:

The MQL Wizard will appear. Select “Custom Indicator” to create an empty indicator and click on “Next”:

Enter the name, copyright and link of the strategy as well as the input parameters with their types and default values (initial values) by clicking “Add”-Button and press “Next”:

On tab event handlers select checkbox “OnCalculate” as we need this event to check for our strategy on every tick. Press “Next”:

On tab drawing properties select checkbox “Indicator in seperate window” as we need a seperate window to print out the debug values. Press “Finish”:

The initial code of your indicator will appear:

//+——————————————————————+
//| BinaryOptionsStrategyExample.mq4 |
//| Copyright 2020, __martin__ |
//| https://www.mql5.com/en/users/__martin__ |
//+——————————————————————+
#property copyright “Copyright 2020, __martin__”
#property link “https://www.mql5.com/en/users/__martin__”
#property version “1.00”
#property strict
#property indicator_separate_window
//— input parameters
input int period_fast= 5 ;
input int period_slow= 10 ;
input int method_both= 0 ;
input int applied_price_both= 0 ;
//+——————————————————————+
//| Custom indicator initialization function |
//+——————————————————————+
int OnInit ()
<
//— indicator buffers mapping

//—
return ( INIT_SUCCEEDED );
>
//+——————————————————————+
//| Custom indicator iteration function |
//+——————————————————————+
int OnCalculate ( const int rates_total,
const int prev_calculated,
const datetime &time[],
const double &open[],
const double &high[],
const double &low[],
const double &close[],
const long &tick_volume[],
const long &volume[],
const int &spread[])
<
//—

3.2.1 Input parameters

The initial input parameters are created with the MQL Wizard (see 3.2 Create Binary Options strategy) and we will enhance them with the following steps.

To avoid to have to enter int-values for applied price and averaging method of the Moving Averages for input parameters, the type for method_both and applied_price_both is changed from int to type of enumeration with a default value.

In addition comments for the input parameters are added to show the comments as labels instead of variable names:

//— input parameters
input int period_fast = 5 ; //Fast MA value
input int period_slow = 10 ; //Slow MA value
input ENUM_MA_METHOD method_both = MODE_SMA; //MA method
input ENUM_APPLIED_PRICE applied_price_both = PRICE_CLOSE; //MA applied price

With this modifications the input parameters provides a dropdown with the available values to select as well as “labels” for the input parameters:

3.2.2 Include Binary-Options-Strategy-Library

If you have downloaded and stored the library (see 2. Installation) into \Include folder ([path to your MetaTrader 4]\MQL4\Include), you are able to include the library like this:

//+——————————————————————+
//| BinaryOptionsStrategyExample.mq4 |
//| Copyright 2020, __martin__ |
//| https://www.mql5.com/en/users/__martin__ |
//+——————————————————————+
#property copyright “Copyright 2020, __martin__”
#property link “https://www.mql5.com/en/users/__martin__”
#property version “1.00”
#property strict
#property indicator_separate_window

Binary-Options-Strategy-Library will enhance the input parameters with two new parameters:

  • Place only one SELL or one BUY trade per candle
  • Check only at the beginning of a new candle for the strategy

3.2.3 Add CallStrategy()

Add a call to CallStrategy()-function in OnCalculate() of your strategy indicator to call the strategy on every new tick. CallStrategy() is provided by Binary-Options-Strategy-Library you have inlcuded like discribed above:

3.2.4 Implement CheckMyRules() and helper-function

In CheckMyRules()-function, which is called through the Binary-Options-Strategy-Library, the conditions for the strategy are implemented and trades are placed through PlaceTrade()-function of the library. Values of both Moving Averages are temporarilly stored in variables to compare them in if-conditions while the values of the Moving Averages are taken from the helper-function GetValuesForMA():

//— input parameters
input int period_fast = 5 ; //Fast MA value
input int period_slow = 10 ; //Slow MA value
input ENUM_MA_METHOD method_both = MODE_SMA; //MA method
input ENUM_APPLIED_PRICE applied_price_both = PRICE_CLOSE; //MA applied price

//+——————————————————————+
//| Place your Trading-Rules here – see example below. |
//| StrategyTester will call this function to place trades. |
//| DO NOT: |
//| – Rename function |
//| – Add function paramaters, e.g. CheckMyRules(int a) |
//| – Change function return type, e.g. int CheckMyRules() |
//+——————————————————————+
void CheckMyRules()
<

//Store MA values with shift=0 (current candle) -> current candle,
//call helper function GetValueForMA() to get the value – see helper-functions below
double emaSlow_Current = GetValueForMA(period_slow, 0 );
double emaFast_Current = GetValueForMA(period_fast, 0 );

//Store MA values with shift=1 (past candle) -> last candle,
//call helper function GetValueForMA() to get the value – see helper-functions below
double emaSlow_Past = GetValueForMA(period_slow, 1 );
double emaFast_Past = GetValueForMA(period_fast, 1 );

if (emaFast_Past > emaSlow_Past
&& emaFast_Current //Check if slow MA and fast MA crosses
<
PlaceTrade( OP_SELL ); //Place SELL-Trade for Strategy-Tester, function is located in BinaryOptionsStrategyFunctions.mqh
>

if (emaFast_Past
&& emaFast_Current > emaSlow_Past) //Check if slow MA and fast MA crosses
<
PlaceTrade( OP_BUY ); //Place BUY-Trade for Strategy-Tester, function is located in BinaryOptionsStrategyFunctions.mqh
>

3.2.5 Print out debug values

The function PrintDebugValue() privides a possibility to print out debug values while the tester is running. In the example below the values of the Moving Averages are printed out with their variable names as labels:

//— input parameters
input int period_fast = 5 ; //Fast MA value
input int period_slow = 10 ; //Slow MA value
input ENUM_MA_METHOD method_both = MODE_SMA; //MA method
input ENUM_APPLIED_PRICE applied_price_both = PRICE_CLOSE; //MA applied price

//+——————————————————————+
//| Place your Trading-Rules here – see example below. |
//| StrategyTester will call this function to place trades. |
//| DO NOT: |
//| – Rename function |
//| – Add function paramaters, e.g. CheckMyRules(int a) |
//| – Change function return type, e.g. int CheckMyRules() |
//+——————————————————————+
void CheckMyRules()
<

//Store MA values with shift=0 (current candle) -> current candle,
//call helper function GetValueForMA() to get the value – see helper-functions below
double emaSlow_Current = GetValueForMA(period_slow, 0 );
double emaFast_Current = GetValueForMA(period_fast, 0 );

//Store MA values with shift=1 (past candle) -> last candle,
//call helper function GetValueForMA() to get the value – see helper-functions below
double emaSlow_Past = GetValueForMA(period_slow, 1 );
double emaFast_Past = GetValueForMA(period_fast, 1 );

PrintDebugValue( “emaSlow_Current: ” ,( string )emaSlow_Current, 0 ); //Label and value in line 0
PrintDebugValue( “emaFast_Current: ” ,( string )emaFast_Current, 1 ); //Label and value in line 1
PrintDebugValue( “emaSlow_Past: ” ,( string )emaSlow_Past, 2 ); //Label and value in line 2
PrintDebugValue( “emaFast_Past: ” ,( string )emaFast_Past, 3 ); //Label and value in line 3

if (emaFast_Past > emaSlow_Past
&& emaFast_Current //Check if slow MA and fast MA crosses
<
PlaceTrade( OP_SELL ); //Place SELL-Trade for Strategy-Tester, function is located in BinaryOptionsStrategyFunctions.mqh
>

if (emaFast_Past emaSlow_Past) //Check if slow MA and fast MA crosses
<
PlaceTrade( OP_BUY ); //Place BUY-Trade for Strategy-Tester, function is located in BinaryOptionsStrategyFunctions.mqh
>

//+——————————————————————+
//| Get MA values for period, method, applied price and shift. |
//| For details of iMA() see https://docs.mql4.com/indicators/ima |
//+——————————————————————+
double GetValueForMA( int _period, int _shift)
<
return iMA ( NULL , 0 ,_period, 0 ,method_both,applied_price_both,_shift);
>

3.2.6 Use of external Indicators (ex4 files)

In addition an external indicator which stores its values in buffers can be accessed for the Binary Options strategy, even if only the compiled ex4-file exists.

Let us say we like to include the signal line of the KVO indicator https://www.mql5.com/en/code/8677 to place trades only if the signal line is over 0 for BUY trades and under 0 for SELL trades. Download the KVO.mq4 indicator and place the compiled (ex4 file) into folder \Indicators\Downloads ([path to your MetaTrader 4]\MQL4\Indicators\Downloads).

To compile the needed .ex4 file open KVO.mq4 in MetaQuotes Language Editor and click on button “Compile” or just restart your MetaTrader 4 after the file is stored in the described folder and MetaTrader 4 will do this automatically for you.

First we have to identify the relevant buffers which stores the relevant values to access. Therefore we press the button “Data Window” in MetaTrader 4 to show all available buffers of the used indicators and drag the KVO indicator on a chart. By hovering the cross over the chart (press mouse-wheel on chart to bring up the cross) the buffer values of the indicator of the hovered timeperiod will be shown in data window:

The data window labels tells us the second buffer value of the indicator stores the signal line. If buffers of indicators did not have labels, we can find the right one by comparing the buffer values with the displayed value under the cross in the chart and indicator. Buffers of an indicator starts with 0, so we have buffer value 1 = buffer 0, buffer value 2 = buffer 1 and so on and we have to access buffer 1 to get the signal value.

Next we have to know all input parameters of the external indicator we like to access. By draging the indicator on a chart, we see all input paremeters:

Let us further say, we like to access the indicator with (its default) values: 34, 55 and 13. We use a helper function (based on iCostum), wich provides us the possibility to get the values of the indicator with parameters for buffer and shift, while shift 0 will be the value of the current candle, shift 1 the value of the last candle, shift 2 the value of the second to last candle and so on. In addition we temporarilly store the values of the indicator buffer and enhance the if-condition of the strategy:

//— input parameters
input int period_fast = 5 ; //Fast MA value
input int period_slow = 10 ; //Slow MA value
input ENUM_MA_METHOD method_both = MODE_SMA; //MA method
input ENUM_APPLIED_PRICE applied_price_both = PRICE_CLOSE; //MA applied price

//+——————————————————————+
//| Place your Trading-Rules here – see example below. |
//| StrategyTester will call this function to place trades. |
//| DO NOT: |
//| – Rename function |
//| – Add function paramaters, e.g. CheckMyRules(int a) |
//| – Change function return type, e.g. int CheckMyRules() |
//+——————————————————————+
void CheckMyRules()
<

//Store MA values with shift=0 (current candle) -> current candle,
//call helper function GetValueForMA() to get the value – see helper-functions below
double emaSlow_Current = GetValueForMA(period_slow, 0 );
double emaFast_Current = GetValueForMA(period_fast, 0 );

//Store MA values with shift=1 (past candle) -> last candle,
//call helper function GetValueForMA() to get the value – see helper-functions below
double emaSlow_Past = GetValueForMA(period_slow, 1 );
double emaFast_Past = GetValueForMA(period_fast, 1 );

//Store signal value (buffer 1) of KVO indicator from current candle (shift 0)
double kvoSignal = GetValuesFromIndicator__KVO__( 1 , 0 );

PrintDebugValue( “emaSlow_Current: ” ,( string )emaSlow_Current, 0 ); //Label and value in line 0
PrintDebugValue( “emaFast_Current: ” ,( string )emaFast_Current, 1 ); //Label and value in line 1
PrintDebugValue( “emaSlow_Past: ” ,( string )emaSlow_Past, 2 ); //Label and value in line 2
PrintDebugValue( “emaFast_Past: ” ,( string )emaFast_Past, 3 ); //Label and value in line 3

if (emaFast_Past emaSlow_Past //Check if slow MA and fast MA crosses
&& kvoSignal > 0 ) //Check if signal value of KVO is over 0
<
PlaceTrade( OP_BUY ); //Place BUY-Trade for Strategy-Tester, function is located in BinaryOptionsStrategyFunctions.mqh
>

//+——————————————————————+
//| Get MA values for period, method, applied price and shift. |
//| For details of iMA() see https://docs.mql4.com/indicators/ima |
//+——————————————————————+
double GetValueForMA( int _period, int _shift)
<
return iMA ( NULL , 0 ,_period, 0 ,method_both,applied_price_both,_shift);
>

//+——————————————————————+
//| Example how to get values from external indicators |
//| see https://docs.mql4.com/indicators/icustom |
//| Parameters: |
//| int _buffer – indicator-buffer (starts with 0) |
//| int _shift – value to shift; 0 = current candle, 1 = prev candle |
//+——————————————————————+
double GetValuesFromIndicator__KVO__( int _buffer, int _shift= 0 ) //Change “__KVO__” to indicator name
<

return (
iCustom (
NULL , //NULL for current timeframe selected in tester – NO CHANGES NEEDED
0 , //0 for current symbol selected in tester – NO CHANGES NEEDED

//BEGIN EDIT
“\\Downloads\\KVO.ex4” , //Filepath and filename of the indicator (*.ex4 file)
//BEGIN INDICATORS INPUTS
34 ,
55 ,
13 ,
//END FOR INPUTS
//END EDIT

_buffer, //Buffer index (begins with 0), _buffer is adressed over function parameter – NO CHANGES NEEDED
_shift //Shift (0 for current candle), _shift is adressed over function parameter – NO CHANGES NEEDED
)
);

It is also possible to enhance the input parameters of our strategy indicator with the values for the used KVO indicator and set the values in helper function by variables. As this tutorial should be just an example and “as simple as possible”, this variant is not shown.

3.3 The complete code

Below you will find the complete code of the Binary-Options-Strategy-Example from all the steps above, ready to drag on the Binary-Options-Strategy-Tester to test and see the results on chart:

//+——————————————————————+
//| BinaryOptionsStrategyExample.mq4 |
//| Copyright 2020, __martin__ |
//| https://www.mql5.com/en/users/__martin__ |
//+——————————————————————+
#property copyright “Copyright 2020, __martin__”
#property link “https://www.mql5.com/en/users/__martin__”
#property version “1.00”
#property strict
#property indicator_separate_window

//+——————————————————————+
//| Place your input parameters here – see example below |
//+——————————————————————+
//— input parameters
input int period_fast = 5 ; //Fast MA value
input int period_slow = 10 ; //Slow MA value
input ENUM_MA_METHOD method_both = MODE_SMA ; //MA method
input ENUM_APPLIED_PRICE applied_price_both = PRICE_CLOSE ; //MA applied price

//+——————————————————————+
//| Custom indicator iteration function |
//+——————————————————————+
int OnCalculate ( const int rates_total,
const int prev_calculated,
const datetime &time[],
const double &open[],
const double &high[],
const double &low[],
const double &close[],
const long &tick_volume[],
const long &volume[],
const int &spread[])
<
//—

CallStrategy(); //Call the strategy, function is locatet in BinaryOptionsStrategyLibrary.mqh (included above)

//— return value of prev_calculated for next call
return (rates_total);
>

//+——————————————————————+
//| Place your Trading-Rules here – see example below. |
//| StrategyTester will call this function to place trades. |
//| DO NOT: |
//| – Rename function |
//| – Add function paramaters, e.g. CheckMyRules(int a) |
//| – Change function return type, e.g. int CheckMyRules() |
//+——————————————————————+
void CheckMyRules()
<

//Store MA values with shift=0 (current candle) -> current candle,
//call helper function GetValueForMA() to get the value – see helper-functions below
double emaSlow_Current = GetValueForMA(period_slow, 0 );
double emaFast_Current = GetValueForMA(period_fast, 0 );

//Store MA values with shift=1 (past candle) -> last candle,
//call helper function GetValueForMA() to get the value – see helper-functions below
double emaSlow_Past = GetValueForMA(period_slow, 1 );
double emaFast_Past = GetValueForMA(period_fast, 1 );

//Store signal value (buffer 1) of KVO indicator from current candle (shift 0)
double kvoSignal = GetValuesFromIndicator__KVO__( 1 , 0 );

PrintDebugValue( “emaSlow_Current: ” ,( string )emaSlow_Current, 0 ); //Label and value in line 0
PrintDebugValue( “emaFast_Current: ” ,( string )emaFast_Current, 1 ); //Label and value in line 1
PrintDebugValue( “emaSlow_Past: ” ,( string )emaSlow_Past, 2 ); //Label and value in line 2
PrintDebugValue( “emaFast_Past: ” ,( string )emaFast_Past, 3 ); //Label and value in line 3

if (emaFast_Past emaSlow_Past //Check if slow MA and fast MA crosses
&& kvoSignal > 0 ) //Check if signal value of KVO is over 0
<
PlaceTrade( OP_BUY ); //Place BUY-Trade for Strategy-Tester, function is located in BinaryOptionsStrategyLibrary.mqh
>

//+——————————————————————+
//| Get MA values for period, method, applied price and shift. |
//| For details of iMA() see https://docs.mql4.com/indicators/ima |
//+——————————————————————+
double GetValueForMA( int _period, int _shift)
<
return iMA ( NULL , 0 ,_period, 0 ,method_both,applied_price_both,_shift);
>

//+——————————————————————+
//| Example how to get values from external indicators, |
//| see https://docs.mql4.com/indicators/icustom |
//| Parameters: |
//| int _buffer – indicator-buffer (starts with 0) |
//| int _shift – value to shift; 0 = current candle, 1 = prev candle |
//+——————————————————————+
double GetValuesFromIndicator__KVO__( int _buffer, int _shift= 0 ) //Change “__KVO__” to indicator name
<
return (
iCustom (
NULL , //NULL for current timeframe selected in tester – NO CHANGES NEEDED
0 , //0 for current symbol selected in tester – NO CHANGES NEEDED

//BEGIN EDIT
“\\Downloads\\KVO.ex4” , //Filepath and filename of the indicator (*.ex4 file)
//BEGIN INDCATORS INPUTS
34 ,
55 ,
13 ,
//END FOR INPUTS
//END EDIT

_buffer, //Buffer index (begins with 0), _buffer is adressed over function parameter – NO CHANGES NEEDED
_shift //Shift (0 for current candle), _shift is adressed over function parameter – NO CHANGES NEEDED
)
);
>
//+—————————————————————–+

4. Run a backtest (video)

The following video shows how to run a backtest of your Binary Options strategy in Strategy-Tester of MetaTrader 4:

  • Start Binary-Options-Strategy-Tester in Strategy-Tester of MetaTrader 4 and set the input parameters
  • Drag your Binary Options strategy indicator on the chart, set the input parameters and check “Allow external expert imports” on the “common” tab
  • Drag your used indicators with their used input parameters on the chart to see their values while tester is running (optional)
  • Save all settings in a template to run the test with all settings again – using the pause button of the Strategy-Tester (optional)
  • See the results of your Binary Options strategy on the Strategy-Tester chart

5. Run a forward test

To do a forward test simply drag the Binary-Options-Strategy-Tester utility and your strategy indicator on your demo or live chart of your broker instead of using it in Strategy-Tester:

  • Drag Binary-Options-Strategy-Tester utility on demo or live chart and set the input parameters
  • Drag your Binary Options strategy indicator on the chart, set the input parameters and check “Allow external expert imports” on the “common” tab
  • Drag your used indicators with their used input parameters on the chart to see their values while forward test is running (optional)
  • Save all settings in a template to run the test again with all settings (optional)
  • See the results of your Binary Options strategy on demo or live chart

6. FAQ

Question: Why do you show an example of a non profitable Binary Options strategy?
Answere: This is just an example how to build a strategy in an Indicator to communicate with the Binary-Options-Strategy-Tester utility in marketplace to test and improve your strategy.

Question: Binary-Options-Strategy-Tester stops after the exact amount of losses with error “Array out of range”. Why?
Answere: Binary-Options-Strategy-Tester can rise an error after x losses to stop Tester and to analyse the situaion on the chart. If you do not want to, just switch off the option in settings.

Question: No arrows appear on chart after I draged my indicator with a working strategy on it. What happened?
Answere: You have to enable “Allow external expert imports” on the “common” tab while you drag your strategy-indicator on the chart (log message will show an error in this case).

Question: No arrows appear on chart after I draged my indicator with a working strategy on it with “Allow external expert imports” enabled. Why?
Answere: A strategy has to call a function of Binary-Options-Strategy-Tester to place virtual trades. Related to the MQL4 license concept this only works if the product has a working license. Therefore you have to purchase the product.

Question: No arrows appear on chart after I dragged my indicator with a working strategy on it and I got errors like “Cannot call ..” or “Cannot load ..” in the log of MetaTrader 4. What can I do?
Answere: Use the latest version (greater v1.00) of BinaryOptionsStrategyLibrary.mqh. Check version tag in code of your BinaryOptionsStrategyLibrary.mqh and see changelog v1.01 of BinaryOptionsStrategyLibrary.

Question: I see no results on Strategy-Tester tabs “Results”, “Graph”, “Report”. Where I can see the results?
Answere: Strategy-Tester of MetaTrader 4 can not handle Binary Options so these tabs con not be used. Therefore this utility calculates all wins and losses and prints the results on the chart.

7. Miscellaneous

As I need a possibility to test Binary Options strategies automated in Strategy-Tester of MetaTrader 4 for long time periods in a short time and to do foward tests on the chart of the broker, this utility was build. I have spent a lot of time for the concept and the implementation of the Binary-Options-Strategy-Tester as well as for the documentation. Maybe there is a better way to do it and maybe some improvements will bring it closer to fit the needs of you. So please feel free to contact me for ideas for improvements!

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