If you are looking to trade forex then it can be a good idea to check your trading strategy against forex historical data records. So that in that way you can judge if your trading could have been profitable in times past. There are dangers to this however, in that many times people try to retrofit a trading approach too closely to the tick data, and so it almost becomes farcical as they pour over intraday historical records seeing where they can tweak their approach and make extra money.  All well and good, except for the fact, that most of the time these trading gains are mythical when applied to the actual forex markets, and don’t actually make money when traded for real. (Little aside… If you want a forex system that consistently makes money then this works great.)

So in some senses forex historical data is a bit of a doubled edge sword. It can cut through and show you trading strategies that don’t work, but equally well it can lead you to falsely assume either that an approach won’t work in the future “Because it hasn’t in the past…” or else conclude that you have a “Surefire winner on my hands!” Either of which approaches is incredibly dangerous when it comes to using your real money to trade.

Applying The Pareto Principle to Forex Historical Data…

Many times you would be better off applying the Pareto Principle (the 80-20 rule) to your forex trading; rather then interminably pouring over forex charts, futures charts, commodity charts, historical stock prices, livecharts and any other manner of data that it is now possible to get almost instantly, and seemingly in unlimited quantities.  Number crunching forex historical data is all well and good, but ultimately rather then trying to build up increasing amounts of information, your forex trading profitability may actually be better served by stepping back from the parapet of having enough data that you could metaphorically drown in. And instead take your data in more bite size chunks, and focus on the small number of indices and small number of trading factors that actually lead you to make money.

If you aren’t currently making money with Forex, but are instead looking to branch out into it, and are looking to secure some forex historical data so that you can endlessly dig around and backtrade. You may actually be better to ditch that plan entirely and seek out a proven forex system that consistently brings in profits. Whilst you may find it difficult to believe that people would sell such systems, the truth is that many of the most successful systems have almost no threshold on the amount of money that they can produce, so there is no problem with sharing it because its just extra money in the bank for the system developer.

So it actually makes more sense to sell the system to other people (especially as more people using a system can actually have the effect of leading forex indicators rather than following) as there are a lot of people for whom a consistent profit is more important, and who would be willing to invest in a proven system.

One system that I like is this one (Sssshhh… Keep it to yourself )

Forex Historical Data… Final Thoughts

So, by all means back trade with forex historical data, but be open to simply trying out a number of the more successful systems that are already available. Sometimes it is simply not necessary to reinvent the wheel.

This one for example makes money consistently.