How reliable is MT4 strategy testing?

After working tirelessly for weeks I have finally developed an EA that is profitable in strategy tester, I kept on fine tuning it until I could tune no more. It compares data from 6 indicators and opens trade with 1:1.5 RR Ratio. I'm new to auto trading but since I'm a programmer, writing EA wasn't an issue. The results are way beyond what I expected. I'm not sure how this will workout in live trading but it sure does in test. I have attached the test result of GBPUSD based on 1 year history M5 chart data modeled on every tick. Initial deposit was set to $600 and after a year its $131,000, a whooping 22,000% profit. Can any one who has experience with EA testing comment on its relevance with live trading? I'm not sure if I should first test it on demo account or just go live with it.

Backtesting should be use only to confirm that your strategy is working as per your rules ... NEVER to check its profitability.

The only valid profitability results are from forward trading on LIVE feed.

Backtesting and even demo don't have real market conditions and broker behavior.

That's what I thought. I think I will just go live with lower number of lots initially.

Yes small lot is the way to do ...

It sounds as if you have been curve fitting.

be careful

$600 to $131,000 in one year

Personally I wouldn't be happy with that ....... but not for the reasons some may think...

My suggestion is to open 3 accounts with three different brokers, 200$ on each account, the same setting for all accounts but of course with lower lot size.

After one or two weeks maximum, it will be clear for you if its working or not as you expected, and for sure the most important is the best broker you have to keep your account with.

Hi Nabz, how did you get on with this EA? would you be willing to share it?

MT4 strategy tester is good cause you can backtest with spreads wider than normal.. BUT if you trade "illiquid" pairs with relatively tight stops... it's really bad. I mean slippage has great impact .

If you want to take things a step further, I assume this EA is increasing the Lot size with time as the profits are increasing with time so do the drawdown as I can see from the profitability chart.

if so, then try to backtest your strategy with a fixed lot value, say 0.1 Lots, and check the profitability!
but again do not account for profitability! you just need to see the profitability vs the drawdown to check if the strategy is working or not!

optimize your strategy as needed, then put it into the forward live test, a demo account with any broker can do the job for at least a month!
if the results are great then it will be the time to switch into real live trading!

Good Luck and Best wishes