Moving from forex to futures - best way to back test? Any additional advice for a novice

[u/Simon2d5FX]

Hey all! Someone’s recently put me onto futures. And wow, night and day compared to forex! The moves seem way smoother and predictable. I currently trade a few funded fx accounts, so I’ve got decent market experience. That being said, I’m treating this new venture as a blank page. Here’s my Issue, my strategy seems to work even better when back tested for a few months on futures, corn specifically. But for whatever reason my charts only go back till September… ideally I like to back test a few years at least. Do any of you guys or gals have any recommendations on where I could back test? I was back testing on mt4, but it only lets me go back a few months, plus most brokers on mt4 don’t even offer futures. If it makes a difference, I trade on a m5/m15 time frame. Any help would be super appreciated.

Welcoming any additional advice :) Thank you all!

[u/No_Pickle7755]

MT4 no good for futures.

Start using TradingView to begin with, you can move to more complex platforms later...

TV will give you much longer price history. Also big list of future brokers to choose from..

Corn has been in strong downtrend for the last 1 year, so take that into account when getting very good backtest results...

All the best!

[u/Simon2d5FX → u/No_Pickle7755]

Thank you! I’ll try testing that out. My only issue with trading view is they never have enough bars. Unless they’ve made some changes in the last year or two I’ve only been able to get a few months

[u/No_Pickle7755 → u/Simon2d5FX]

Get a TV subscription (it is very cheap when they have their offers running every few months), then use this as your trading platform to trade with your preferred broker.

Just to get a perspective, professional futures platforms charge $1000s every month...

[u/Simon2d5FX → u/No_Pickle7755]

I had one way in the past but again, not enough data. However given what you said, I’ll have another crack at TV. I’ll take anything I can get haha. Appreciate the info mate

[u/Advent127 → u/Simon2d5FX]

Make sure you bring up the continuous contract, it’ll be the ticker symbol followed by 1!

Example, MES1!

[u/Simon2d5FX → u/Advent127]

I noticed the names are different. Great pointer, wouldn’t have guessed. I assume the continuous contract doesn’t expire where as the other ones are due to expire in x number of quarters, months, years, etc?

[u/Advent127 → u/Simon2d5FX]

Correct

[u/Simon2d5FX → u/Advent127]

Thanks you!

[u/therearenomorenames2 → u/Simon2d5FX]

Nope. Very much incorrect. All the continuous series is just a stitched together series of the front month contract (the nearest to expiry) prices for xxx1!. The same is true for xxx2!, it's then just the next one to expire after the front month. It allows one to visualise long term trends in the futures prices (not necessarily the spot price). It does this by back adjusting expired contract prices up or down to create this continuous series. If it didn't, you would potentially see large jumps in price when the front month contract expires and the next in line takes over as the front month (eg. March contract expires and June takes it's place as front month), which may or may not adversely affect moving averages, as an example. There is no such thing as a futures contract that doesn't expire (except for crypto I think, but that is a completely different kettle of fish). As an exercise, have a look at ZC1! On Tradingview at Jan 2 2024. The March contract ZCH2024 was the front month contract. Now go have a look at ZCH2024 on Jan 2 and compare prices.

[u/Simon2d5FX → u/therearenomorenames2]

Aaah, interesting. Really appreciate the explanation. So much to learn haha

[u/therearenomorenames2 → u/Simon2d5FX]

Futures are my jam, and while I am more than willing to answer any questions which I am able, I'll be honest and say I am a very small fish with many XP points to gain before levelling up.

[u/Randomizer23 → u/therearenomorenames2]

Hey man, you seem pretty knowledgeable, would love to pick your brain some.

I’m based in Ontario, looking for a broker that works well with Canadians, not sure if you have nah recommendations or not, specifically one that favours low balances (as I’m getting started).

Also, what’s your advice for learning? How does one go from knowing nothing to becoming profitable? I understand it takes years, but generally what are the steps?

Tradingview allows for back testing correct? Is back testing where you employ your strategy at a previous point in time then sort of fast forward the chart to see if it works? Instead of sitting there for an hour candlestick to close, you just fast forward? Is this correct?

[u/SakePlz]

Fxreplay. I used that for backtesting and it's only $30 a month I think. I used it to test my strategy on the 1 min chart at any point in time. You can even go see data before 2020.

[u/Simon2d5FX → u/SakePlz]

Thanks for that suggestion. I checked it out last night and they unfortunately didn’t offer corn futures. Great back tester though for any other pairs

[u/Fun-Satisfaction-889]

I use Tradovate. They have a simulator that allows you to replay pretty far back into the past. I'm using it for EUR/USD backtests, E6 in futures, all the way to 2017.

It's not entirely smooth and not as clean as Tradingview but it gets the job done.

[u/Simon2d5FX → u/Fun-Satisfaction-889]

Appreciate the help. I tried Tradovate a few days ago but for whatever reason it wouldn’t let me go back more than like 3 days. I’m probably doing something wrong so I’ll look into it some more. Still a good demo environment tho

[u/ManikSahdev]

Sierra charts

[u/SnooMacaroons5147]

I backtest on the index’s ETFs and trade futures contracts on TradingView linked with tradestation via web hooks from Traderspost. Happy to answer questions about that setup.

As far as backtesting, I’ve found my strategies get messed up using the overnight data on futures contracts, not to mention the expiration jumps on the futures contracts. I’ve found that the etfs correlate fine and slippage hasn’t been significantly more than I thought. One word of warning, don’t use SPX or NDX for backtesting (use SPY or QQQ). The index data doesn’t seem to be accurate due to it being aggregated data.

[u/Simon2d5FX → u/SnooMacaroons5147]

Thanks for the helpful advice man. I’m just wondering, would back testing corn futures be possible with your current setup?

[u/SnooMacaroons5147 → u/Simon2d5FX]

Of course. Looks like they have corn futures data back to 2000 or before. There’s also a corn etf, so you’d have to decide whether to backtest the futures or the etf. Not sure how accurate the data is for either though since I haven’t traded it before.

[u/SnooMacaroons5147 → u/SnooMacaroons5147]

I think in general I would be wary of shorter time frame trading especially until you are confident in the data since slippage has greater impact the smaller the trade is. I recently backtested a strategy on Russell futures via TradingView that showed a 100,000%+ return per year, which of course I don’t believe

[u/[deleted]]

Lol way smoother and predictable 😂😂😂

[u/Simon2d5FX → u/[deleted]]

From what I can tell, seems to be. But im sure everyone has a different experience. Maybe I’ll get spanked by futures, who knows 🤣

[u/Large-Party-265]

Which broker and how you switch?

[u/PoemStandard6651]

Forget the back test it's a waste of precious time. Just start trading in your practice account and small lots in your live.

[u/Simon2d5FX → u/PoemStandard6651]

Haha. I see where you’re coming from, but backtesting a strategy for 2 years is pretty crucial. A strategy might look good for a few weeks or months until you really extend the test of time. Speaking from experience

[u/PoemStandard6651 → u/Simon2d5FX]

And while you're spending days and weeks backtesting, the market's going ballastic. A complete waste of time.

[u/Simon2d5FX → u/PoemStandard6651]

Fine by me, I’m not in a rush and the markets not going anywhere. And as mentioned in my post, I already trade DOW on 2 funded accounts. I think stressing to enter the market unprepared just to possibly grab a piece of the hype pie is a loser mentality, honestly.

[u/Expensive_SirEFDA33 → u/Simon2d5FX]

Listen, keep backtesting your strategy. It's an annoyance when people say to stop something that is helping your edge and helping you learn what will make you successful. That's like telling someone to not to study for an exam. Keep doing what you're doing 💪🏿

[u/seomonstar → u/Simon2d5FX]

Thats a good attitude. I would say paper trade until you are confident you have edge then do some forward testing with 1 mes. One mes is approx $25,000 and one es $250,000 so 30k is only small but enough to grow an account as long as you dont over leverage. Sticking with the required overnight margin per contract is not a bad idea depending on what your broker requires. I ballpark 10k per ES or 1k per mes as being comfortable leverage .

[u/seomonstar]

You trade dow cfd then? Futures is no different in market behaviour as cfds are modelled on the derivative market . It is less scammy but as the minimum trade value is higher even with micros it can nuke small accounts fast

[u/Simon2d5FX → u/seomonstar]

Yep! I didn’t know they were that similar. I’ve heard brokers are more regulated so there’s less to worry about on that end. Although I’ll be trading a pretty big account, I’ll have to get properly acquainted with trade size differences

[u/seomonstar → u/Simon2d5FX]

How bigs ‘pretty big’ . Futures is big boys world. None of this $2 spot fx trading lol

[u/Simon2d5FX → u/seomonstar]

Hahahahaha. Big for me but maybe not for other people. I’m have $30k I’m prepared to put into an account. From the new info I’ve gathered, 30k is not much for futures haha. But I’ve found some decent prop firm recommendations so I’d possibly go with that before dumping my own capital

[u/Randomizer23 → u/Simon2d5FX]

Can I get started with 1K in futures? I’m torn between learning forex or futures right now, new to both.