I've just noticed that many people are interested in backtesting forex but don't know how to get started. Since traders often ask about this, I want to share our understanding as well.

The first thing to understand is that backtesting forex isn't very complicated. In fact, backtesting is simply testing our trading system with historical price data to see how much profit or loss we would have made if we had used this strategy in the past. The assumption is that if the system performed well in the past, it has a good chance of performing well in the future.

The easiest way to do a forex backtest is using Excel or Google Sheets. If you don't want to write code, you can download EURUSD price data into a spreadsheet and create formulas to calculate indicators like SMA. For example, if your rule is that a short-term SMA crossing above a long-term SMA is a buy signal, and crossing below is a sell signal, the spreadsheet can do the calculations and tell you the profit or loss.

But if you want a more detailed forex backtest, TradingView is a good option. It has a built-in Strategy Tester and allows you to test existing strategies or write your own with Pine Script. The advantage of TradingView is that it can process large amounts of data quickly without long waiting times.

After completing a forex backtest, what numbers should you look at? The most important metric is the Sharpe Ratio— the higher, the better—because it shows how much return you get relative to the risk taken. Additionally, Maximum Drawdown is also important because it indicates the largest potential loss of your capital. If the drawdown is too high, even with good returns, it might be too risky.

For those using a mobile device, you can do forex backtesting on TradingView via their mobile app. If you want to do backtesting with Excel on a mobile, you'll need to use Google Sheets, which can be accessed through a browser or by downloading the Google Sheets app.

Once you've completed a forex backtest, don't rush to use the system live. First, test it on a demo account. If the results are good, then consider real trading. Remember, backtesting is only a rough estimate; past data may not predict future performance.

Therefore, if you're a serious trader, try doing forex backtests. It will help you better understand your system and make more confident trading decisions.