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Backtesting Guide: Validate your Forex Trading Strategy with Forex Tester 3

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Note: This post started as a Forex Tester 3 review, but I decided to turn it into a Backtesting Guide showing you how to validate your Forex trading strategy, which (I hope) will be more valuable to you.

If I had to pick one thing that boosted my confidence & certainty in my ability to succeed in Forex trading, it’s the decision to start backtesting. What if I were telling you that the only thing between you (right now) and you (the successful trader) is taking the time to validate your Forex trading strategy?

That could very well be the case – because the moment you start to test your trading strategy, you get to see whether your edge truly exists in the market.

And according to Mike Bellafiore, having an edge is a MUST for any trader. That’s also common-sense.

For a Forex trader, a popular tool to achieve that purpose is Forex Tester 3. But there are other alternatives!

In this article, I’d like to take a slightly broader approach to backtesting and cover the following:

  1. Why Validate Your Forex Trading Strategy with Backtesting?
  2. What You Need To Get Started
  3. Using Forex Tester 3 To Backtest
    1. The Cool Features
    2. The Dark Side
  4. Alternatives To Forex Tester 3
  5. Wrap Up And Conclusion

Why Validate Your Forex Trading Strategy?

I get it...it can be scary to backtest. Everything you've been trying to trade might turn out to be unprofitable in reality. Backtesting is like this make-it-or-break-it moment where you'll get to see what you can truly expect as a trader.

Here's the key, you can't expect to become a full-time/professional trader until you sit down to validate your Forex trading strategy. In addition, will all the non-reliable Forex teachers online, you'd better make sure that what you do is solidly tested.

 

Why Using Forex Tester 3 For Your Backtesting

In How To: Backtesting A Trading Strategy The Right Way, I discussed how and why I was often backtesting my trading strategies manually. Most often than not, I'm on-the-go and don't have access to a backtesting software (especially when all you have is a Macbook Air).

However since I got home a couple of weeks ago, I got interested in trying out Forex Tester 3 - a Forex backtesting software that has launched only recently (at the time I publish this article). It has been created to make the process of validating your currency trading strategy much simpler and time-efficient.

The software surely still has some drawbacks that I'll address below, but it allowed me to find and test a way to improve my current trading strategy in about 2 hours.

 

Cool Features of Forex Tester 3

Forex Tester 3 Screenshot Example

I went around Forex Tester for a couple of hours and those are the things I noted that make the software absolutely worth it in my opinion:

  • Ability to take screenshots of your trades easily (example above)
  • Easy trade management method
  • Ability to move quickly in time (one candlestick at a time)
  • A huge time saving without the pain of scrolling through charts
  • Statistics on your trading computed automatically

I recommend you take a look at the video at the top of this post to see in more details what I mean by those features.

 

The Dark Side of Forex Tester 3

The first thing I must mention - the price.

At roughly $300 US, Forex Tester 3 has made some traders look for cheaper/free alternatives to backtest. However, I do not think the price should be seen as just a $ amount, especially when we're talking about a tool that can make you a better trader. Using it has to be seen as an investment (more on that later).

Also, here are some things I noted:

  • Comes with a learning curve
  • Inability to risk a percentage of your account per trade
  • Only works on a Windows PC (unfortunately for Mac users)

 

Alternatives To Forex Tester 3

Remember when I said Forex Tester wasn't the only way to backtest? That's absolutely right, and for a long time, I avoided using it - mostly because of the cost I admit. 🙂

That being said, one of the alternatives to validate your Forex trading strategy is to use your current trading platform, scroll back in time and move forward one candlestick at a time. That's quite simple in Meta Trader 4 where you can press F12 to move candlestick-by-candlestick. The main trouble here is that you must track the trades you take by yourself and compute the stats thereafter.

TradingView, which I'll review in details in my next article, simplifies that process slightly. You can take a screenshot of your trade (like in Forex Tester) and add a fancy visual to show the outcome of your trades. However, the data available is sometimes limited.

Lastly, the Fx Blue Trading Simulator is an addition to Meta Trader 4. It is to note that I haven't tested this option in-depth, but members of the Facebook group did. So far it looks okay if you're a fan of Meta Trader 4 - which I'm not 🙂

 

Wrapping Up: Do You Really Need Forex Tester 3?

The short answer is no. I personally don't think Forex Tester 3 is an essential software for traders. However, if you are an aspiring trader looking to validate its Forex trading strategy, it's certainly a plus to have that software in your arsenal.

In the end, it all comes down to the Return-on-Investment. The question to ask yourself is:

What Will I Save/Gain By Using The Software?

If using the software means you'll save a few hours that you can get paid for, then, by all means, invest a bit of money in speeding up your backtesting!

If you're tired of not spending enough time with your family and fear having to go through a hard period of validating your Forex trading strategy, again you're better getting the resources before jumping into backtesting.

Reminder: Do not forget that quality tools often requires you to spend some money. If you're not willing to spend a dime, you'll have a tough time going through the ups and downs of trading.

Exclusive DT2 Deal For Forex Tester 3

Forex Tester often runs promotions for the software. If you click this link, you'll be able to grab your copy of Forex Tester 3. It's a one-time payment and comes with a 30-day money back guarantee.

In addition to this, I'll provide you with my a Backtesting Implementation Coaching Call for free as a bonus! We'll discuss together to help you speed up the process of backtesting and coming up with trading strategies more quickly. Simply send me a copy of your receipt at this email and you'll be good to schedule a call within 24 hours.

Disclosure: This post may contain affiliate links. This means I may receive a small commission if you choose to purchase something from a link we post. Don’t worry, it won’t cost you anything. This small percentage just helps me produce more content and shows me you care about what I do. I'll always appreciate your support!

  • Jan

    Thanks for this great article Etienne.
    How does it work with ‘upgrades”.
    Lets say next year there will be ForexTester 4 released. Am I forced to always buy “upgrade” in order for my new tester to work?

    • Hey Jan, thanks for the comment!

      From what I’ve seen, you can choose to upgrade or not. For instance, I bought Forex Tester 2 about 2 years ago.

      When the third version came out, I could stick to the 2nd or upgrade to the third (at a reduced price). To be honest it doesn’t make a big difference to upgrade. You can keep going with an older version for a long time because it will still do what it’s made for – that is backtesting.

      Hope that helps! Let me know if I can help in any way!
      Cheers,

      • Jan

        Hi Etienne,
        Thanks a lot.
        Thats what I was confused about. Now it is clear.
        Thanks
        Jan