Backtest and replay a strategy

The Strategy Lab is where you find out whether an idea works before it costs you anything. Pick a pair, pick a day in the past, and the chart starts there. You step forward a candle at a time (a candle is one bar of price over a set time) and you can buy and sell as you go. Nothing you do reaches a broker.

Starting a session

1. 1Open Strategy Lab in the menu (in the simple menu it sits under All tools).
2. 2Press New session.
3. 3Give it a Name you will recognise later, such as London opens or trend days.
4. 4Choose the Instrument, the Timeframe and the day to Start on.
5. 5Set the Starting balance, and the Commission per lot, round trip your broker charges (zero if you do not know it yet).
6. 6Press Start session.

Your plan keeps a number of sessions: Free 5, Trader 25, Pro 200, Elite 500, Desk 1,000. At the limit, delete an old session to start another.

Walking it forward

One bar

The next candle appears. This is the one to use when you are thinking.

Ten bars

Ten at once, for skipping the quiet part.

Play / Pause

Runs on its own. The Speed buttons go from 1x (one candle a second) to 32x.

Everything to the right of where you are has not happened yet, and the chart genuinely does not have it. It is not hidden from you, it has not been sent. You cannot peek, which is the only way practice means anything.

Trading it

1. 1In the Order box on the right, choose Market, Limit or Stop as the Order type. Market deals now, at the close of the bar you are looking at. Limit waits for a better price than now. Stop waits for the price to run past a level.
2. 2Type the Size, the Stop and the Target.
3. 3Read Risk, Reward and RR (the target's distance divided by the stop's). They are worked out with the same maths the real order ticket uses.
4. 4Press Buy or Sell.
5. 5To leave a trade, press Close on its row, or Close all.

Open trades are drawn on the chart as lines and show what they are worth at the candle you are on. Closed ones get an entry arrow, an exit arrow and a dashed line between them in the colour of the result, so the chart reads as a story rather than a list.

How the fills work, and why

A backtest is only worth the fills it refuses to give you. Three rules do most of that work, and all three are deliberately on the unkind side:

Market orders

Fill at the close of the candle you are looking at, the candle you decided on. Filling at the next open would flatter the result.

Stop and target in one candle

The stop is taken. A candle cannot tell you which price came first, and assuming the good one is how people end up trading a strategy that never existed.

A gap past your stop

Fills at the open, not at the stop. A stop is an instruction to your broker, never a promise about price.

If your results look worse here than in a spreadsheet you built yourself, this is usually why, and this is the closer number.

Reading the numbers

This session shows the same figures the journal shows for your real trades: win rate, profit factor (money won divided by money lost), expectancy (what an average trade made), total R, average R, your best and worst, the deepest drawdown (the biggest fall from a high point) and your longest losing run. They are calculated the same way on purpose, so you can put a tested idea next to your actual results and compare like with like.

Stopping and coming back

Close the tab whenever. The session remembers the candle you were on and every trade you took, and picks up there. The cursor only ever moves forward. You cannot rewind and take the trade again knowing what happened.

Finish session closes anything open at the current candle and freezes the numbers. A finished session is a record, and it stops accepting trades.

Other ways to practise

• Replay one of your own closed trades: Replay my trade.
• Watch two to four charts on one clock: Multi-chart replay.
• Test rules without clicking through: Automated backtesting.