How to test Expert Advisors for Binary Options

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In today’s lesson I will share my experience with you, because if you also want to develop, test, optimize or trade advisors on binary options, then you will surely step on the same rake as we do. Therefore, this article was written – to save you from unnecessary difficulties, save deposits and save time.

Testing difficulties

How to test Expert Advisors for Binary Options

The first and main difficulty in testing EAs on binary options is the lack of quote history. I have not found a single broker that would allow me to upload my own quotes over a long enough period of time. I solved this problem as follows. Firstly, I installed two terminals for trading binary options – the first one I disconnected from the network and uploaded my high-quality minute quotes there for testing, optimization and bot development, and the second one I left connected to the broker for control testing already on the broker’s quotes history.

The second problem I faced is that there is no binary options market as such. There are centralized exchange markets, there is a decentralized Forex market, but there is no BO market, none at all. Binary options are derivatives of financial instruments with fixed income. But how to produce quotes for these derivatives, each broker decides for himself. Moreover, he often approaches this moment very creatively, limiting himself to drawing a graph only with his imagination. At the same time, to the natural question of why there is a candlestick with a 40-point tail on your chart, and no one else has one, the answer will be standard – it all depends on the quotes providers, which quotes provided, you see such. But everything is not entirely sad – yes, many brokers draw, but mostly within reason. Nevertheless, it is not uncommon for an advisor to work perfectly for one broker, and barely flounder for another.

How to test Expert Advisors for Binary Options

The third problem is the MT4 terminalnot intended for binary options trading. But many brokers provide an opportunity to trade using advisors or manually (attributing comments to orders) from a native and familiar terminal. However, the terminal tester does not even know about this, and when testing the Expert Advisor for binary options, it returns not entirely correct information. In particular, the tester calculates the profit on orders as if we were working in the forex market. In addition, a trade closed at zero is considered profitable and is taken into account when calculating the percentage of profitable trades. And the percentage of profitable trades is almost the most important indicator when trading binary options! As a result, it turns out that the tester writes the percentage of profitable trades at 70%, but in fact, 15% of them are closed at zero. And this is a completely different statistics, it turns out only 55% of profitable trades and such a bot will pour.The rest of the statistics is also considered incorrect: profit factor, drawdowns, profit and loss – all this will be different, not to mention the profitability graph drawn in the tester.

What does it take to test properly?

How to test Expert Advisors for Binary Options

You will need two terminals, as I said above, high-quality quotes (for example, from Alpari), minimal knowledge of  mql4 programming and excel programs, a library for testing binary options (which you will find at the end of the article), and, of course, the EA itself in the source (that is, the mql4 file). When I spoke about knowledge of mql4, I may not have expressed myself quite correctly. Knowledge is needed at the student’s level – only to connect the library to the advisor. To do this, you need to put the library in the desired folder and write a couple of lines of code. At the same time, this whole process is analyzed in detail in the video tutorial, as, in fact, everything else. After connecting the library to the Expert Advisor, you can start testing. At the same time, upon completion of the process in MT4, a new file will appear in the terminal folders by the name of the currency pairand with a .csv extension. This file can be easily opened in excel, in which you can already calculate any trade statistics. As part of this lesson, we will only display the basic statistics – the percentage of profitable trades and the total profit. And, of course, we will build a graph of the growth of the deposit.

Conclusion

How to test Expert Advisors for Binary Options

Of course, this method of testing, in comparison with testing Forex EAs, does not seem very convenient. However, this is the only way at the moment. By the way, the minus of the fact that all basic manipulations with statistics have to be done additionally in a third-party program can be easily turned into a huge plus. In addition to tests of individual currency pairs, you can make a general test of the entire portfolio, and in addition to basic trading statistics, you can add a huge amount of additional statistics such as the distribution of profits by hours and days of the week and a bunch of beautiful charts and charts for a more detailed study of the test results.

Best ranking verified brokers this year

BINOMO BINOMO APP Android + iOS
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