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In the area of trading, all participants spend lots of effort and time to make insight and analysis on the market’s past and future performance. Without high-quality data, it’s hard to develop a truly profitable system for trading. To rock it, you will definitely need high-quality historical Forex data to know the past behavior, including a good understanding of where and how to get it.

 

Companies worldwide usually follow the up-to-date news, gather the acquisition of timely market information, and actually spend billions of dollars on industry-related data every year. No matter what’s approach you’ll choose first, let’s see how to get guaranteed high-quality results.

 

Contents:

Historical Data: Why Do We Need It?

Data Types & How to Get Them?

Using Data Mining

Using Market Data

Using Backtesting

Final Thoughts

 

Historical Data: Why Do We Need It?

The historical data is an archive of the price movement of an asset for a fairly long time, which sometimes can reach decades. Most Forex brokers, as an additional service, provide their clients with a history of quotes for MT4, which is also known as MetaTrader 4 or an online trading platform. It is widely used by foreign retailers and includes not only the main currency pairs but also precious metals such as silver or gold.

 

Without an archive of Forex quotes, it will be impossible to test trading advisors (​​written and compiled scripts), strategies, and indicators. Testing them requires a large number of bars not only for the current year but also for previous years. Forex historical data are useful for the following reasons:

  • Experts get a deeper insight into the industry and may develop a system to get a clear understanding of when what or how to start trading,
  • It helps to predict the behavior and expect pretty much the same results, avoiding past mistakes,
  • Traders may be more confident in trading and get more benefits when moving into the future.

 

You can also find publicly available archives of quotes online, download them and test additional historical data on asset prices. However, there are tick quotes and it is hard to get them just like that, only by self-collection. So how to get the history of quotes for MetaTrader4 to make any Forex trading more complete and verified?

 

Data Types & How to Get Them?

As we mentioned above, a trading robot helps to check the performance (efficiency) of your strategy. By the way, Price Action patterns are also checked and tested with a deep history of quotes.

 

Forex indicators work well only when the archive is full of quotes. Otherwise, miscalculations will be made, and the algorithm of the trading instrument will not show the correct information. The history of Forex quotes must be appropriate and complete.

 

The first main type of historical data, without which it’s simply impossible to make testing, is price data. You can get it from different periods and from different sources. The most common price data are for:

  • Daily charts ─ the history is deepest for daily charts and it can be obtained starting from 1971 (the MetaTrader4 terminal does not support a longer history);
  • Minute charts ─ as a rule, it goes a maximum from 1999 - 1998;
  • Tick charts ─ ticks are generally not earlier than from 2004 - 2007.

 

Other classifications include:

  • End-of-day data ─ basically, the data gathered/reported at the end of the session.
  • Intraday data ─ it is the traded prices of a security over the course of a session.

 

For any period, the data looks like this: candlestick, time, open price, highest price, lowest price, close price, and tick volume. In some sources of quotes, the tick volume may be absent. Also, for some periods, you’ll not find the opening time of the candlestick or maximum and minimum prices. Tick ​​quotes differ from quotes converted in a specific period. In such quotes, you can find the date, time accurate to seconds, Ask and Bid prices.

 

 

In addition to the price data, you may need some specific data, for example, macroeconomic indicators, such as inflation, house prices, or unemployment data for certain countries, as well as even more specific ones, such as solar activity or the opinions of traders regarding a particular instrument.

 

In general, as a rule, the search for unusual data often opens up interesting and profitable opportunities on which you can build your trading system and make a profit. Finage has Forex Data with global coverage and you can get real-time and historical foreign Exchange (FX) rates via WebSockets and APIs get over 200 world currencies data and work with them.

 

Using Data Mining

You can use data mining as it is the first process you should focus on when getting data. The process helps to analyze huge amounts of data sets. As new tech and innovations have evolved, we get an opportunity to make data mining operations. You just need to have a laptop and database. With the possibility to analyze large amounts of data, you can quickly find hidden patterns that could be intensively valuable in the financial industry. To make data mining operations, you have to focus on the next inputs:

  • Your device power: you must have a good processor, hard-drive space, and RAM.
  • Historical data set: get specific data to analyze it.
  • Query: it means you should focus on basic questions (algorithms) that are necessary to begin deciphering data.

 

Using Market Data

To get more valuable data, you should also focus on the relevant and up-to-date market data that can be obtained in various varieties. For example, you can get such market data as:

  • Volatility measures,
  • Volume,
  • Open interest.

 

Using Backtesting

Another popular way is backtesting: it is an app of a trading method or strategy to a selected historical data set. The backtesting helps to get statistical data on which are relied on automated trading systems, algorithmic trading, and other methods.

 

To do backtesting, an expert has to define a trading strategy and get access to a relevant data set. Further, the strategy is applied as an overpayment upon data, so a simulation of your strategy performance could be made. Such a study is useful and you will get the following parameters that will show how advantageous backtesting study could be:

  • Number of opportunities
  • Success rate
  • Risk vs reward

 

However, when analyzing the  Forex historical data, you should remember some cons and pitfalls. For example, you can face hindsight bias, data omissions, and mistakes, hardware performance issues, difficulties involved in the projection of randomness, human factors, and tech issues.

 

Final Thoughts

As it is a common way of getting behavior data, the extensive review of the past is often used by traders and investors. Yes, you can get the most accurate testing and a good guarantee of the reliability of the results with the historical Forex data. The question of quality testing turns into a search for detailed historical data and the subsequent assembly of quotes of the highest possible quality.

 

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