An Alternative to Expert Advisors – Part 2

Filed under: Learn Forex Trading |

In part one of this article, we looked at how to put historical data from MT4 into an excel spreadsheet. Right now, we are going to look at what to do with this data.

 

In part one, I explained how to put data (from 1993 to the present) from the daily chart on the AUD/USD pair into an excel spreadsheet. Once you have done this, you should have a list of the open, high, low, and close of each daily candle on the AUD/USD pair going back to 1993.

 

So what can you do with all of this data? Well, there are some useful tools in excel for analysing data, and one of the simplest of these is the calculator, which allows you to use formulas.

Figure 1. shows the data for the daily candles of the AUD/USD pair (in this example, we are starting with 1999 but you can go back much further than this). What you then need to do is come up with a hypothesis to test. For example, let’s say that you want to go long on all candles that close above the high of the last candle, and you want to close the trade (this is something that I’ve just made up by way of an example) on the close of the next candle. This would be relatively easy to test.

 

If you right click on a cell, you can then go to the ‘calculator’ function. The formula we need is: “If D5>B4,1,0”. This means that if the close of the current candle is greater than the high of the last candle, then we will mark this as “1”. If not, it will be marked “0”.

 

In the next column, you will need the formula: ((D7-D6)*10000)*E6. This will give you the amount in pips that your profit or loss will be. So for 1/06/99, this will be 70 pips, or at $1 per pip, this is $70. However, we also need to take into account the spread, which is vital – so minus $2 from this, and you get +$68.

 

You then need to copy these formulas for every case and analyse the results. For this particular system, in the long term, we found that the system was not profitable. However, the good news is that the potential of testing this data is virtually limitless.

 


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