When beginning your trading journey, it’s important to have a strategy in place. An issue many have when starting forex especially, is many go into investing money without testing if their strategy actually works. The negative to this is of course losing money. A solution to this is trying a Forex testing simulator. In this article, I’m going to give you an overview on a downloadable program called Forex Tester 4.
- What is Forex Tester 4?
- How do I use Forex Tester 4?
- What features does Forex Tester 4 have?
- Historical News Service
- Visual Strategy Builder
- Risk Calculator
- Multiple Testing
- Historical Data
- Automated Strategies
- Indicators & Oscillators
- What are the benefits of Forex Tester 4?
- What are the cons of Forex Tester 4?
- Online reviews for Forex Tester
- What trading level should use Forex Tester 4?
- How do I rate Forex Tester 4?
What is Forex Tester 4?
Forex Tester 4 is a forex trading backtesting software, which allows users to test mechanical strategies. The program also has the ability to replay price action for backtesting manual strategies and allows you to set your percentage risk on each trade. Forex Tester, which was created to help the founders improve their own trading skills, has been available on the market for 14 years with 4 different types of software, those being numbered 1 to 4. They have also been holding the leading position on the market since 2006 with the advantage of the creators knowing exactly what traders are looking for, so you can be guaranteed that this software will have a lot of needed functions for your testing strategy journey.
I recommend you get the newest version which is Forex Tester 4 due to the advanced new features it has, which I will get into, along with many reviews have stated that Forex Tester 3 was not up to the same level as the newest version, nor Forex Tester 2. The program is able to be simply downloaded onto your computer but you can have a free month trial to test if you like the software before purchasing.
How do I use Forex Tester 4?
Forex Tester 4 is easy to use. Simply download the program which you can do here and start to begin creating your testing strategies. Once downloaded, it will automatically have one month of historical data for you to view on 16 different currency pairs as well as gold, silver and 1 month USD historical data. There are 3 things you must do when you first start, download more data, start a test and start a project. I’ll explain how to do each of these.
Download more data – Click on the data center, select a currency pair and update the server.
Begin a test – Start by clicking the start test button. You can pause the test at any time along with changing the speed, timeframe and size of the tick package.
Start a project – Click the start project button, enter your projects name, choose the currencies and then choose to either add an automated calculation, apply time settings or forward testing only mode if you want a realistic trading experience. Once this is created, your test will start automatically.
What features does Forex Tester 4 have?
Forex Tester 4 comes with brand new features that were not on the previous versions with one of the biggest being the risk calculation. The features which the software has are:
Historical News Service
Every trader knows just how political and economic events can have a negative effect on their trades. With this feature, you can gain an insight into how previous events have impacted trades and use this to get an insight into how future events could impact trades e.g Brexit happening in January 2021. The details which you will be able to see from this are time when the news occurred, currency it affected, the time when the news had maximum impact and basic financial expert comments. You can schedule notifications to hear about news for currencies you are most interested in along with being able to get an overview of the news. If the news line is green, then this news will have a strong impact for your trade!
Visual Strategy Builder
Visual Strategy Builder is a separate tool which allows you to build out EAs and indicators along with being able to test out your trading ideas. Simply drag and drop your idea elements onto the tool and it will help create a filter to use for your strategy. Elements which you are able to implement are Indicators, Value, Price and Time along with you can easily set operations for your strategy to perform your desired actions.
This feature is one which a lot of traders are really liking. The risk calculator allows you to enter how much risk you are willing to take on a trade and the software will tell you just how much you could win or lose depending on the number. This is useful especially for beginner traders to accurately and quickly see results and can be extremely useful for when you move on to real trades.
The main purpose of Forex Tester 4 is of course to test your trading strategies. On the software you can easily test multiple strategies, currencies and time frames by using any combination of the three and it showing clearly on a graph. What I really liked about this, is that I could test multiple strategies at one time and could clearly see them. Seeing my multiple strategies play out meant that I could easily learn from my mistakes and understand which strategy worked best and why.
Forex Tester 4 makes learning from your mistakes pretty simple. One element of how it does this is by showing you statistical results. Forex Tester can analyze your strategy results automatically and show a number of results such as:
- the number of total profit and loss trades
- maximum profit and loss trade
- net profit
- profit per month
- average profitable and losing trade
- maximum drawdown
What I also liked was that I could download my results onto a spreadsheet and see them easily at any time. This was great for being able to check my results and compare to see how much I have actually learnt.
Another feature to see your statistics was the profit chart. This does have a difference from the equity chart which you can easily add by clicking on file, add profit chart. The profit chart was extremely easy to read once I understood what each coloured line meant along with what the candlesticks showing equity. The different lines are:
- Green – This indicates your balance and shows your deposit changes
- Red – The drawdown line
- Grey – Your margin line
Candlesticks – These show your equity which shows how your equity is changing over time
Something that is quite important to remember is that the balance line can only be built once the trade has closed whereas your equity line will run whilst the trade is live and show all changes.
Forex Tester allows you to gain access to historical data which is crucial for optimising trading strategies. There are 3 different package options to view the historical data. Those being:
Basic – this is free and available to anyone who has purchased Forex Tester 4. You can see up to 18 years worth of data and this is enough to get you started.
Standard – if you’re looking to know more about small price fluctuations for your trading strategies, this is probably a good option for you. With the paid service you get 800+ symbols, accurate data, daily updates and 5-digit data.
VIP – with the VIP subscription, you will get all the same bonuses that the standard membership has but also gain access to tick data with floating spread which shows you the smallest price changes.
The historical data includes:
- 7 majors
- 28 cross pairs
- 22 commodities
- 16 metals
- 60 exotic pairs
- 111 indexes
- 2 futures
- 4 cryptocurrencies
- and 568 stocks
For me, the free package was enough but I advise anyone looking to gain more in depth analysis to their trading strategies should purchase one of the paid subscriptions.
Just like the name suggests – Forex Tester 4 allows you to create and use automatic strategies. Advantages for using these are:
- Easily see how well strategies are doing in real-time
- Backtest strategies using different/multiple currency pairs and time frames
- Pause at any time to analyse and learn from results
- Test multiple strategies at once to compare winning results
With the automatic strategies you can also combine manual strategies, such as by entering in your strategy manually and letting the programme exit automatically. This is great for saving time and can help beginners understand when to do so appropriately.
Indicators & Oscillators
Whilst there are many premade indicators and oscillators, you can have the ability to create your own custom indicator. If you’re not up to creating your own, don’t worry! There are five different subelements of indicators and oscillators to choose from, containing in total, 61 different varieties. The different premade indicators and oscillators include trend indicators, oscillators, volume indicators, volatility indicators and adaptive indicators.
What are the benefits of Forex Tester 4?
I personally liked Forex Tester 4 more than I thought I would if I’m being honest. After reading the reviews that the 3rd programme had a lot of faults, I was a bit worried before starting. I’ll sum up my three favourite elements of the programme.
- Risk Calculator
This is a feature which most traders can agree is a great addition to the software. Having the ability to easily set your risk and have it worked out for you is something which makes making strategies just that little more easy.
- Easy to use and get started
Forex Tester 4 was pretty simple to use. As I mentioned, once you download the software, begin to download more data, start a test and start a project. To start doing this, they’re easily found by being located in the task bar. Along with everything being able to locate, if you have problems figuring something out, there are easy to follow video tutorials available along with an email for support and forums.
- Ability to create EAs and Indicators
Being able to manually create EA’s and Indicators without having to manually code them is another big feature for the software. This is also really simple to use and allows you to combine different combinations to create the one for exactly what you’re looking for.
What are the cons of Forex Tester 4?
Whilst I liked this software, I do have one major negative. The software did not work on Mac and only Windows. If like myself, you work mostly on a Mac, this is a major downside. However, you can install virtual machines onto your Mac which should allow you to use the software.
Another downside, is the fact that you do have to pay for extra Historical Data. Whilst the free one is fine for beginners, depending on what exactly you are looking to create a strategy for, you may need to get the paid subscription, which is ofcourse, extra on top of already purchasing the initial software.
Online reviews for Forex Tester
Whilst there are various reviews online and on Youtube, the reviews that are easy to read and to the point are actually already available to view on the Forex Tester site. The reviews mention key features such as the risk calculator which I have mentioned as being my personal favourite along with reviewers stating “every trader must try”.
What trading level should use Forex Tester 4?
Whilst the software is easy to use, I do believe that this would be best for those who do have an intermediate level of trading experience. You are afterall testing your trading strategies to ensure when you go to trade with actual money, you can make sure that your trades are the most successful.
I would suggest traders interested to learn the basics of trading first by using websites such as Babypips (you can check out my review here) and then giving it a try. However, if you are a beginner, don’t be afraid to try. The support available from the forums, video tutorials along with email support are extremely good.
How do I rate Forex Tester 4?
To sum up my review, I’m going to review the software in three different elements, those being ease of use, detail and amusement.
Ease of use – I give this 4 stars. Forex Tester 4 is easy to use and every feature has detailed explanations or video tutorials to show how to use each feature, but I am reducing one star purely for the fact that, in my opinion, you do need to have a basic understanding before beginning.
Detail – I’ll give this 5 stars. I loved all the features on this software with the Historical News Service being something which I found extremely useful in order to learn how to build great strategies.
Amusement – I’ll give this 4. I did have fun using this but I did notice some slight bugs such as when I was trying to download my data, it would not work on the first go and suddenly I’d download it twice but this is ofcourse a minor fault. The graphs are easy to read and I enjoyed the ability to make EA’s and Indicators.
Overall, I enjoyed this software and do recommend it for traders looking to test out their strategies before making the leap to real trades. You can follow Forex Trader on Facebook, Twitter, Instagram and my personal favorite social channel of theirs Youtube.