In order to use variable spread, all you have to do is click the Tick data settings button in the MT4 backtest pane and enable the Use variable spread checkbox.
By default, the variable spread used is the unaltered spread stored in the tick data.
If you wish to alter the stored spread, each of the available settings has a certain effect on how the processing occurs:
- As its name implies, the Spread multiplier is a number that will be used as a multiplier for the spread.
For example, if a particular tick had a spread of 20 points and you were using a spread multiplier of 1.5, that tick would have its spread adjusted to 20 * 1.5 = 30 points. Similarly, if the same tick with a spread of 20 points would occur in conjunction with a multiplier of 0.5, its spread would be adjusted to 20 * 0.5 = 10 points.
- The Spread addition parameter lets you configure a number of points that gets added to the spread. Note that this can be a negative amount, resulting in a subtraction.
For example, a tick with a spread of 20 with a spread addition of 2 would become 20 + 2 = 22 points. The same tick (20 point spread) with a spread addition of -5 would become 20 + (-5) = 15 points.
- The Minimum spread parameter lets you configure a minimum spread threshold. Any spread that is lower than this threshold will be set to the configured value.
For example, if you configured minimum spread to 5 points and a tick with a spread of 3 points is encountered, its spread will be set to 5 points.
- The Maximum spread setting enables capping the spread. Any spread that is larger than the configured amount will be set to that value.
Important: a setting of 0 (the default) does not apply any capping, it is the equivalent of not having a maximum spread configured.
For example, if maximum spread was configured to 20 points and a tick with a spread of 22 points was encountered, its spread would be configured to 20 points. If the same tick with a spread of 20 points was encountered and the maximum spread was set to 0, the spread would remain 20 points.
- The settings are applied in the following order:
1. Spread multiplier
2. Spread addition
3. Minimum and maximum filtering.
For example, if you have a spread multiplier of 1.5, a spread addition of 4, a maximum spread of 30 and a tick with a spread of 18 points is encountered, its spread becomes 18 * 1.5 + 4 = 31 points, which is then capped by the 30 maximum and brought down to a final 30 points.
- The bid price is always used as the baseline. Any of the spread modifications applied will only change the ask price.