What Is an Algo and How Does Backtesting Work?

A trading algorithm, or algo, is a program that places trades for you by following fixed rules for when to enter, when to exit, where the stop loss is and how large each trade is. It runs on your own broker account, trades both rising and falling markets and makes the same decision every time the same conditions appear.

How does an algo trade?

Every algo watches one market on one timeframe, for example Nasdaq 100 on a 3-minute chart. When its conditions are met it opens a trade with a stop loss and a size based on the risk you choose, and it closes the trade when the exit rule is met. Our algos trade CFDs on indices and gold, not single stocks. On ProRealTime they run in ProOrder on ProRealTime's servers, so your computer can be off. On MetaTrader 5 they run as expert advisors, usually on a VPS.

What is a backtest?

A backtest runs the rules on historical prices to see how the algo would have traded. It is a simulation. It shows how the rules behave, but it does not show what you will earn, because real trading has slippage, changing spreads and market conditions the history did not contain.

How do we test our algos?

  • Costs first. Spread, commission and overnight financing are included, and every algo is also tested with double costs.
  • Out of sample. Rules are tuned on one part of the history and tested on data they have never seen (walk forward).
  • Stress. Monte Carlo runs of at least 10,000 reshuffled trade sequences, and a version where every trade is counted 25 % worse.
  • Live. The final test is our own live account, published every month since December 2023 on the live results page.

For A+ Algos 2.0 we tested 15,700 trading ideas against the same requirements. Ten passed. You can run the simulated backtest yourself on the backtest page.

What are the risks?

  • Losing periods. Our live account fell −23.5 % from a peak between February and April 2024.
  • Technical problems. A broker outage can stop trading, as when IG had IT problems in September 2025.
  • Overfitting. A system tuned to look perfect on history can fail live, which is why the tests above exist.

Key figures are on A+ Algos in numbers, and you can try one algo free for 14 days.

Trading CFDs involves high risk and you can lose money. Past results, live or backtested, do not predict future returns.

Questions before you start

How risky is algo trading?

All trading carries risk and CFD trading is high risk. You can lose part or all of the capital you put in. Our own live account has had a largest drop from its peak of −23.5% and a worst month of −13.9%. Give any algo at least six months before you judge it.

Are the results real?

The live results come from our own ProRealTime account and have been published every month since December 2023, after trading costs. Backtests are shown separately on each algo and are always marked as simulated.

Can I try before I buy?

Yes. Every algo comes with a 14-day free trial on a demo account. Email us which algo you want to test and we send it to you.

How much capital do I need?

It depends on the algo and the risk you choose. With IG you can start from about €600, but with a small account each losing trade becomes a large share of it. Every single algo page has a capital check that shows your risk per trade.

Does my computer need to be on?

Not with ProRealTime. The algo runs on the broker's servers and you can follow it in the IG app. Expert advisors for MetaTrader 5 need MetaTrader running, so most people use a VPS.

Do I get updates?

Yes. We review every algo continuously and you get new versions for free during your license period.

Why is the shortest license 6 months?

Because an algo has to be judged over many market conditions. A few weeks can look great or awful by chance.

Why do you sell algos you use yourselves?

The algos trade liquid index, gold and currency markets where our customers do not compete with each other. Selling them gives us a second income and you get algos we trust with our own money.

Can I cancel my purchase?

The algos are digital content delivered by email. The right of withdrawal ends once delivery has begun with your express consent and your acknowledgement that you thereby lose the right (Swedish Distance Contracts Act 2005:59, Chapter 2, Section 11, point 11). That is why we offer the free trial first.

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Our portfolios

Algos that rarely lose at the same time, in one license. One portfolio for ProRealTime and one for MetaTrader 5.

See all algos