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How to Backtest Forex News Trading Without Fake Precision

Research protocol · Reviewed 24 Aug 2026

Economic releases create rapid movement and abnormal execution conditions. Historical bars can study price paths, but they may not reproduce the quotes or fills available to a live order.

Separate the signal question from the execution question, and report when the available data cannot answer the second one.

Event candles are not fills

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News trading needs an execution model before a verdict

A wide event candle cannot establish the price available at release time. Define the order type, latency, spread, slippage, rejection, and entry delay. If only OHLC bars are available, constrain the conclusion to historical candle behaviour.

  1. Pre-register the release calendar.
  2. Separate surprise direction from strategy direction.
  3. Use a non-event control at the same clock.
  4. Do not call one result worse than random without repeated random controls.

The most important missing variable in a news backtest is often the fill.

Specify the order before the event

List eligible releases, exact decision time, order type, entry delay, maximum spread, slippage rule, rejection handling, stop, and target. Store whether the data is tick, minute, or coarser.

Use controls that answer the claim

Compare matched non-event windows and repeated random directions or timestamps under the same cost model. Report a distribution of outcomes and clearly limit any inference when the source data cannot model execution.

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