In our first article regarding backtesting we introduced its importance, advantages and disadvantages and showed you how to run it on MetaTrader and observe the results. We also said that to have reliable backtests you need to have accurate and complete data. In this article we will see how to download free historical data on MetaTrader 4 using the History Center.
To run a backtest you need historical data and there are a few ways to obtain this data, some of these are commercial and you will need to pay, luckily there is also some free way. As in all cases what you pay has a better quality of something that you get for free and with historical data it is no different, pay for historical data will give you more data and more reliable.
We will see some commercial source in other articles but for now we will show you how to download some free historical data with MetaTrader.
How to Download free historical data on MetaTrader 4 with the History Center
MetaTrader is a free software and includes many free features, we already saw how it allows you to backtest Expert Advisors and now we can see how to download more historical data to use for the backtesting.
Open from the History Centre from the top menu
Select the instruments you want to download the historical data for and the time frames
Click Download and confirm so that MetaTrader can download the available data from the server of the Broker.
It is important to understand that the historical data downloaded by MetaTrader is the 1 minute data, which is OK to run some backtesting but not perfect, the ideal situation to have the best quality of results when backtesting would be to have the tick data, which is any change that happened in the past, tick by tick. Once the 1 minute data for an instrument is downloaded this is used to generate the data for all the other time frames. The quantity of data available for the History Centre depends from the Broker, some brokers may provide more historical data than others, generally you will be able to download from the History Centre at least a few months of data.
Strategy Tester Modelling Quality
MetaTrader 4 Strategy Tester has an indicator to show you how accurate the backtesting is. This indicator is called Modelling Quality and you can see it when the backtesting is complete in the report tab.
As you can see in the example the Modelling Quality for this backtest is N/A and the bar is not fully green. N/A can be acceptable as long as the bar is almost all green. The most reliable backtest is the one with a modelling quality of 99.9% and a full green bar. For the basic testing of an EA for bugs a modelling quality N/A is acceptable. If you want to test a more accurate profitability of an Expert Advisor the suggestion is to have a modelling quality greater than 90%. The bad news is that you will not be able to achieve a modelling quality greater of 90% with only MetaTrader 4 historical data. The good news is that there are commercial software quite affordable that will allow you to achieve a 99.9% modelling quality. You can find more regarding backtesting with a high modelling quality in the article How to get 99.90% Modelling Quality in Backtesting.
MetaTrader 4 gives you the possibility to download free historical data (1M data) from the History Center. Download free data is surely better than download no data however I would suggest to pay for high quality and reliable tick data, tick data is the best way to have accurate backtesting results and high modelling quality.
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