Edward Joseph S987 Thompson#5

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What is tick data and why is it important in forex backtesting?

Tick data records every price change in the market, unlike candlesticks that aggregate movements over time. High-quality tick data ensures accurate backtests, especially for scalping and high-frequency systems. For example, a 1-minute bar may hide micro spikes that trigger stops; tick-level backtesting reveals true performance. Institutions purchase premium tick datasets from providers, ensuring millisecond precision. Retail traders often rely on broker-provided data, which may be incomplete. Benefits: realism, accurate slippage modeling, and precise risk estimation. Risks: storage size, computational demand, and cost. Tick data underscores the principle: the quality of backtesting data determines the reliability of strategy evaluation.