Backtesting Modeling Quality Warning!

Hello everyone, this post is going to explain the importance of a high modeling quality when backtesting a forex system. There seems to be a strong trend with vendors displaying a sexy equity curve on their webpage with a low modeling quality. Many will show these poor backtests while stating that their system will earn you millions of dollars in a short couple of months. We have all seen this right? Let me tell you that for me to feel confident in a forex system I look for at least 90% modeling quality. Even better is a 99% modeling quality as shown here below.

This 99% modeling quality is achieved using what is called "tick data".  This tick data is provided by a select few brokers for download and represents the most accurate representation of past historical price movements. It is worth mentioning that through metaquotes MT4 history, the highest modeling quality you can achieve is 90%.

In conclusion I want my readers to be aware that we must check the modeling quality of a backtest to protect ourselves from scam vendors. anything less than 90% really is worthless. Also backtest duration is a better representation of how the system will perform over the long term. So let's make sure we study the backtest reports before we buy any forex system.