Forex trading simulation – how it works

To learn Forex trading, simulation is one of the best tools. Simulation can be either back testing or real time (or forward) testing.  Both require meticulous modelling of the Forex market.

This is exactly what our Forex Simulator software does. We didn’t cut any corners here. But the main idea in our development was to make the Simulator as simple to use as possible.

We only develop the functionality that is essential to practice the trading. On this page we explain in detail how our software work.

Forex trading simulation offline (back testing)

Back testing is conducted on the historical market data. Our simulator only uses real market tick-by-tick data. The data is loaded as .csv files. You can download free high quality tick-by-tick data from www.truefx.com. There you can get the historical data for 15 main currency pairs since 2009.

The quotes are available as monthly files. When the Simulator has read the file, it shows the one month calendar where the uploaded data interval will be shown.

You can select the simulation start date and time.

Once the offline simulation is running, you can pause and resume it. You also have multiple options of data feed speed: from 1/4X to 4X and MAX (where the speed is only limited by your hardware).

Forex Trading Simulation on live data (forward testing)

Forward testing is conducted in real time, on the live data feed. The main downside of this approach is that live data is only available when Forex market is open. So you can’’t practice during weekends.

The Simulator uses streaming quotes provided by www.truefx.com. You can select one of 10 main currency pairs from the “Live data feed” drop-down list.

The real-time mode requires good Internet connection. The Simulator monitors the quality of the connection by constantly measuring the round trip time (RTT). RTT is the time needed for the Simulator to get a price data from the server over the Internet. The smaller the RTT value, the better you can simulate the real market. We recommend that maximum RTT should’t exceed 500 ms.

Obviously, in the Real-time simulation we can’t vary the data rate, as we can in offline mode.

However, with the Timeshift functionality this is also possible.

For more details, please consult our User’s Guide.

If you haven’t already, get the Simulator with a free subscription and try it yourself.