If you have ever attempted a prop firm evaluation, you already know the stress is real. You are supposed to trade professionally from day one, with very strict rules, and prove that you can manage risk without losing your cool. While discipline and psychology play a huge role in it, the backbone of passing any evaluation is a strong, well-tested trading strategy. This is where MT5 backtesting comes into play.
The Strategy Tester in MT5 is undoubtedly one of the most underutilized tools at a prop trader's disposal. You can use it to stress-test your ideas, find weaknesses, sharpen entries, and get a sense of how your approach performs across different market conditions-all without risking a single dollar.
Let’s discuss the MT5 backtesting through the lens of prop firm evaluations. Whether you trade forex, futures, indices, or even crypto (depending on your firm), learning how to properly backtest can easily be the difference maker in your ability to pass- or blow-the challenge.
Why Backtesting Matters So Much to Prop Traders
Prop firms aren't just testing your strategy, they're testing your consistency. It means you need a thought-out trading plan that has been proven under the heat of pressure. A backtest gives you:
Confidence in your edge
When you've seen your strategy perform well over hundreds of trades and different market phases, it becomes much easier to stick to your rules during a drawdown.
A realistic expectation of drawdowns
Prop firms can be brutal when it comes to daily and max drawdown limits. Backtesting helps you figure out if your strategy's worst case still falls within those boundaries.
An opportunity to catch flaws before you risk your challenge fee
There is no need to learn your system fails during news spikes after you have blown an evaluation. MetaTrader 5 allows you to figure that out ahead of time.
A way to improve without wagering real capital.
You can test entries, exits, lot sizes, or even whole strategy frameworks risk-free.
Long story short: backtesting isn't optional; it's part of becoming a serious prop trader.
Getting Started: Preparing MT5 for Backtesting
You want your platform set up correctly before hitting that "Start" button. MT5's Strategy Tester is powerful; however, it is only as good as the data and configuration you feed it.
Make sure you're using high-quality historical data
Most proprietary firm brokers provide good historical data; not all of them, however, do it on a tick-by-tick basis. If possible use a broker with high-quality tick data, or import your own if the firm allows you to do so.
The more accurate your data, the more realistic your results.
Testing on a dedicated MT5 terminal
MT5 will lag if you backtest and trade with the same terminal. Many traders download a second instance of MT5 only for Strategy Tester work. It keeps things running smoother.
Install or import your EA or strategy
If you're testing a fully automated system, you'll need the .ex5 or .mq5 file.
If you are testing a manual strategy, you can still use MT5's visual mode in order to replay the market and mark entries by hand.
Either way works.
Choosing the Right Backtest Settings
This is the important part. MT5 provides you with a lot of options, and choosing the wrong ones can result in unrealistic results.
Mode Selection: Ticks, 1-minute OHLCs or Open prices only?
Here's the simple breakdown:
Every tick → Most realistic but also the slowest.
Use this if your strategy relies on precision entries or tight stops, such as scalping, intraday swing trading strategies, breakout trading, among others.
1-minute OHLC → Faster and still decent for most of the swing trading strategies.
Open prices only → It's useful only if your EA is trading strictly at opening candle prices. Most traders shouldn't touch this mode.
If you're getting ready for a prop firm evaluation, then accuracy > speed. "Every tick" is probably always the safest bet.
Spread Settings
Many beginners forget this, but it does matter—a lot.
Prop firm spreads may widen during sessions or news events. If you backtest using the absolute lowest spread, the results will look better than what you'd realistically get.
I'd advise setting spread at:
- Current spread if you're okay with inconsistency
- Fixed, slightly wider spread to simulate real prop firm conditions
- Dynamic spread, if your MT5 version supports it
Optimization vs Single Test
- If you're trying to tweak your settings or parameters, use Optimization.
- If you want to see your current setup in action, select Single Test.
For prop firm purposes: start with a Single Test. Then optimize once you understand the system's weak points.
Running a Backtest in MT5: Step-by-Step
Let's walk through the exact process, keeping things simple.
Step 1: Open the Strategy Tester
Click View → Strategy Tester, or press Ctrl+R.
Step 2: Identify what you need to test
- Choose your EA or indicator.
- Choose the symbol, for example EURUSD, XAUUSD, US30.
- Choose your time frame.
- Ensure that the symbol matches the one provided by your prop firm.
Step 3: Select a testing period
This depends on your trading style:
- Day traders → 6–12 months
- Swing traders → 1–3 years
- Scalpers → 3–6 months – more important is the tick data than the length of time
The goal isn’t to cherry-pick good market conditions. Test the bad periods too.
Step 4: Set your deposit and leverage
Prop firms usually offer pre-defined account sizes with leverage limits.
If your challenge is:
$50,000
1:100 leverage
Then you would take the same setup into MT5; this would give you a backtest similar to the evaluation environment.
Step 5: Tap “Start” and let the magic happen
Then, the Strategy Tester will run through the data and give you this gorgeous report with graphs and stats, and has every trade listed.
