What Do Metatrader Backtesting Results Mean? Analysis of Gold Slap Backtesting Results

Backtesting in the Metatrader platform is a method used to analyze how a trading strategy or Expert Advisor (EA) robot performs on historical data. The image above shows an example of backtesting results for the Gold Slap EA robot. These results provide critical information to evaluate the reliability and profitability potential of the robot.

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Key Metrics in Backtesting Results and Their Meanings

1. History Quality: 35%

This represents the accuracy of the test. A higher percentage indicates more reliable data. Lower values can lead to misleading results. The 35% in this example indicates below-ideal quality.

2. Initial Deposit: 400.00

This is the virtual starting balance used in the test. The starting deposit is a critical reference point for standardizing backtests. A smaller amount is more practical because some EAs are riskier and not suitable for larger budgets.

3. Total Net Profit: 4,737.68

This is the total net gain from all trades. When evaluating an EA, a high net profit indicates profitability, but it should be assessed alongside other metrics.

4. Gross Profit and Gross Loss

• Gross Profit: 5,812.24

• Gross Loss: -1,074.56Gross profit represents the total earnings from profitable trades, while gross loss represents the total amount lost in losing trades. The difference between these two gives the net profit. High gross profit and low gross loss signify good performance.

5. Profit Factor: 5.41

This value is the ratio of total gross profit to total gross loss. A value above 1.0 indicates that the strategy is profitable. The 5.41 in this example is an excellent result.

6. Recovery Factor: 7.30

This metric shows the rate at which losses are recovered. A higher value indicates strong recovery capability after losses.

7. Drawdown Metrics

• Balance Drawdown Absolute: 3.60

• Balance Drawdown Maximal: 503.36 (11.24%)

• Balance Drawdown Relative: 11.24%Drawdown measures the peak-to-trough decline in account balance. The maximum drawdown is crucial for assessing the risk level of a robot. A drawdown of 11.24% indicates a reasonable risk level.

8. Sharpe Ratio: 32.26

The Sharpe ratio measures risk-adjusted returns. A higher Sharpe ratio indicates a better risk-to-reward ratio. This is a critical indicator for investors.

9. Total Trades: 208

This shows the total number of trades conducted during the test. A higher number of trades provides more statistically significant results.

10. Profit Trades and Loss Trades (%)

• Profit Trades: 97 (93.27%)

• Loss Trades: 7 (6.73%)The percentage of winning trades is crucial for evaluating the success of the robot. A win rate of 93.27% is highly impressive.

11. Consecutive Wins and Losses

• Maximal Consecutive Wins: 1 (2,380.96)

• Maximal Consecutive Losses: 12 (-503.36)These metrics show the streaks of consecutive wins and losses. They help in understanding the stability of the strategy.

Why Are These Metrics Important?

When purchasing or using an EA robot, it is essential to pay attention to the above metrics for the following reasons:

• Risk Management: Metrics like drawdown and the Sharpe ratio help you understand the risk level of the robot.

• Profitability Potential: Net profit, profit factor, and win percentage evaluate the potential earnings of the robot.

• Statistical Reliability: The number of trades and history quality determine the reliability of the results.

Based on these results, the Gold Slap EA demonstrates strong performance with a low drawdown and high profit factor. However, as with any investment, it is crucial to remember that these results are based on historical data and do not guarantee future performance.

By carefully analyzing these metrics, you can make more informed investment decisions when considering the Gold Slap EA or similar robots.