How to test the indicator in MetaTrader 4

Hello, friends! In 830 build of Metatrader 4, there is now a feature of real testing of Forex indicators in the strategy tester. I.e. you can now watch the work of any indicator in “real time”, i.e. in the visualization mode.

Why is it necessary? First, to determine whether there is “redrawing” of the indicator signals, and secondly to evaluate its profitability and usefulness for your strategy without the right side of the chart which interferes your sober assessment.

How to test the indicator we will consider in the instructions below.

How to test the indicator in MetaTrader 4

To show you the capabilities of this function, we will test it first on a standard indicator MACD, bundled with Metatrader 4, and then on a modified version of the indicator Traders Dynamic Index (TDI), as the tester can be used with a standard and all other independently (downloaded) installed indicators.

But sometimes there are some problems due to bugs in the current Metatrader 4 builds. There may be a situation that you have installed the indicator, but it is impossible to test it in the tester. At the moment, it’s hard to know the root cause of the problem. Probably, it is either from the fact that the indicators were written before the validation function appeared in Metatrader 4, or because of flaws of the terminal. Perhaps it will be fixed in future versions of the terminal.

As with the testing of expert advisors, first, you need to download the history of quotes.

This can be done via the menu: “Tools” — “History Center“:

Or, use the key F2 on the keyboard.

Here a menu with the history of currency pairs appears:

Suppose that we need GBPUSD pair.

We select minute charts (M1) to get the most accurate history and push “Download“:

Once you have downloaded the history, you can close the quotes window and open the window “Strategy Tester“.

To do this, find and click on the icon of magnifying glass or press the keyboard combination Ctrl+R:

You’ll see such menu:

If earlier at the place marked on the screenshot we had the ability to test advisors only, we now have a selection box where you can select the type of tested objects:

Let’s first run a test of some standard indicator, for example, MACD:

Any period can be set. I’ll set M30:

When clicking on “Indicator properties“, we will open the settings for testing:

We have the standard settings. You can change them at your discretion.

The window “Symbol Properties” can not be changed:

It displays the details of spread, stop level, type of swap and so on.

When you click on “Open chart“, in theory, the same chart visualization, as during the test, should be opened. Nothing happens in my terminal . Most likely, this is a shortcoming of the current version of the terminal. So if this feature doesn’t work in your terminal then don’t worry.

When we click on “Modify indicator” we get its code:

If you have knowledge in MQL programming you can edit the indicator.

You can’t put a tick “Optimization” as it is an indicator, not EA.

In the item “Use date” we put a tick and select the interval at which we want to test the indicator:

Once everything is configured, click “Start“.

Downloading will happen in a few seconds and the chart will be displayed in a new window:

You can change the opened chart. Make it larger or smaller, replace bars to candles or vice versa, change the color scheme… You can add any other indicator also.

For our case, let’s change the color scheme, replace bars to candles and add a moving average:

Now, let’s change the type of Model to “Every tick of control points” and we’ll see how much slower visualization will be.

What this type of modeling is? This is the most accurate emulation method, based on all available time frames. For example, the movement of the price of the M30 is calculated based on the M1 candles data.
The method of “Control points“, which we had before, is rougher. It takes data from the nearest minimum timeframe. Testing accelerates because of it. It turns out that timeframe M15 was used on M30, as it is the closest minimum timeframe.

After the opening of a new chart speed of visualization becomes much slower, that is surely more convenient for analysis. I suggest you choose the type “Every tick” because it’s more convenient and more accurate.

Also, note that the old chart of visualization is not closed, it remains in the tab:

With its help, you can do any comparisons or close, that it would not interfere you.

Now let’s test the third-party indicator TDI:

What can we do in the tester?

The most important thing is that we can monitor the indicator in real time. For example, if there are arrows on the entrance, you can see, whether it disappears after a certain number of candles or not. And if you hope to open a deal, you can make marks on the chart.

Imagine that with this indicator we would sell when green and red line bounce off the upper border of blue indicator, and they would be above the level 68:

To mark entrance somehow, we mark it with an arrow:

Somewhere in this place we would exit:

In the end, because of this, we can get statistical results for analysis:

Conclusion

Keep in mind that trading with one indicator is a thankless task, the most efficient use occurs with a trading system. It is recommended to test any indicator to appreciate its potential advantages and weaknesses, as well as if it fits you personally. It is no secret that some traders are able to earn money, for example, by means of Stochastic indicator signals, while others persistently lose money using the same signals.

After testing you will not have false impressions of the indicator, as the chart is “alive” and you can’t see what will happen next. Because of this, your mind will not be able to evaluate the signals of the indicator and its importance in successful trading somehow wrong.

We can conclude that function of indicators testing may be useful not only for identifying the “redrawing” of the indicator signals, but also it will help to evaluate its potential for your trading.

Take care, Michael Pivonka

ForexTraderPortal.com