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.

Frequently asked questions

How to start trading?

If you are 18+ years old, you can join FBS and begin your FX journey. To trade, you need a brokerage account and sufficient knowledge on how assets behave in the financial markets. Start with studying the basics with our free educational materials and creating an FBS account. You may want to test the environment with virtual money with a Demo account. Once you are ready, enter the real market and trade to succeed.
How to open an FBS account?

Click the 'Open account' button on our website and proceed to the Trader Area. Before you can start trading, pass a profile verification. Confirm your email and phone number, get your ID verified. This procedure guarantees the safety of your funds and identity. Once you are done with all the checks, go to the preferred trading platform, and start trading.
How to withdraw the money you earned with FBS?

The procedure is very straightforward. Go to the Withdrawal page on the website or the Finances section of the FBS Trader Area and access Withdrawal. You can get the earned money via the same payment system that you used for depositing. In case you funded the account via various methods, withdraw your profit via the same methods in the ratio according to the deposited sums.