MQTrader Education Series

Author: MQTrader Jesse   |   Latest post: Fri, 10 Jan 2020, 3:08 PM


MQ Trader – Introduction to Backtesting

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MQ Trading strategies are very popular among many users, as they are able to detect buy or sell signals based on quantitative data by using Artificial Intelligence (AI) technology. Different trading strategies have different calculation and thus having different level of sensitivity towards the share price. To know more about MQ trading strategy, you can refer to Introduction to MQ Trader Trading Strategy.

Some people might be wondering what is accuracy of trading signals that are generated by MQ trading strategies, as trading signals appear at different period when different trading strategies are used. In this topic, we are going to introduce our latest feature, backtesting to all of you. Backtesting is a technique used to assess the viability of a trading strategy in predicting the actual results when it is applied to the historical data.

How does backtesting work?

Backtesting offers investors to evaluate and optimise trading strategies and analytical models before they are implemented in the investment. As mentioned earlier, not all trading strategies work well on all stocks’ technical charts, as different trading strategies has varying characteristics and sensitivity towards market sentiments and momentum. Hence, a trading strategy is used to backtest the historical data of a stock to determine whether it work well in the past or not.

Challenge of Backtesting

Traders must come out with their strategies and test them with a good faith by avoiding bias in the process. Thus, the developed strategy should not be dependent on the historical data. This requirement is extremely hard to be fulfilled, as traders literally construct the strategies according to the historical data. At the meantime, they have to be very strict on the strategy when it is tested with different sets of data to evaluate the reliability of the result.

It is impossible to perform backtesting without any tool (i.e. software), as it will take ages to test the strategies with as much historical data as possible for the past few years. Backtesting becomes even more complicated if many trading strategies that traders propose are not valid leading to endless trial and error has to be performed.

Besides, data dredging might arise if a wide range of hypothetical strategies are tested against the same set of data. In certain cases, they show successful result but in fact they fail to do so in the real-time market. The main reason for the failure is contributed by the situation where many invalid strategies beat the market over a certain time period by chance.

MQ Backtesting

Automated backtesting that can replace the boring and tedious manual backtesting is now available in MQ Trader system. MQ Trader system provides several potential and reliable trading strategies (i.e. EMA 5 Crossover, ADX Crossover, MACD and RSI) to be tested with all the stocks in the market by using MQ backtesting. The backtesting result with various success rates can be viewed instantly by just simply a click in MQ Trader system. MQ Backtesting will be explained in details in the following blog post – MQ Trader – How to quantify signal quality with MQ Backtesting? [HENGYUAN] (Part 1).

MQ Trader Workshop

For those who are interested in MQ backtesting, you can visit MQ Trader Workshop - Budget 2019 Outlook & Backtesting With MQ Trader [Free Registration!] to know more about our coming workshop on 14 November 2018. 

*Note: 300 MQ Points will be given away in the workshop!

Community Feedback

We encourage traders to try out and evaluate the MQ Trader system and provide us feedback on the features you like to see in the system. We have received many positive feedbacks so far, and we are currently compiling and reviewing them for possible inclusion into the next release of the system.

We would like to develop this system based on community feedback to cater for community needs. Thanks to all those who have provided valuable feedback to us. Keep those feedbacks coming in!


This article does not represent a BUY or SELL recommendation on the stock covered. Traders and Investors are encouraged to do their own analysis on stocks instead of blindly following any Trading calls raised by various parties in the Internet. We may or may not hold position in the stock covered, or initiate new position in the stock within the next 7 days.

Join us now!

MQ Trader stock analysis system uses Artificial Intelligence (AI), various technical indicators and quantitative data to generate accurate trading signals without the interference of human's emotions and bias against any particular stock. It comprises trading strategies which are very popular among fund managers for analysing stocks. 

MQ Trader stock analysis system is SPONSORED for MQ Trader members. To use this amazing tool, you can sign up via MQ Trader Sign Up!

Contact us

Please do not hesitate to contact us if you have any enquiry:

Email: admin@mqtrader.com 


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