Glossary
Backtesting
Backtesting runs a trading strategy on historical data to estimate how it would have performed. A good backtest is not a promise of future results.
Backtesting replays historical price data and runs a strategy or EA against it, simulating the trades it would have taken. It’s the standard first check before risking real money, and in MT4 it’s done in the Strategy Tester.
The big caveat: a strong backtest is not a promise of live profit. Results can be skewed by incomplete tick data, optimistic spread assumptions, and especially over-optimisation (curve-fitting), where a strategy is tuned to past noise and fails forward.
Use backtesting to reject bad strategies, then forward-test on a demo, and always watch the drawdown.
Related terms
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