Back test


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Back Test

To use past data to predict future events. Researchers use back testing to find relationships between apparently unrelated events and determine if one causes the other. One may conduct back testing to inform one's investment decisions or strategy, though the practice is not always accurate because a great number of inputs cause economic events.

Back test.

A back test simulates the investment return that an investment strategy would have produced over a specific period.

For example, someone who wanted to evaluate a strategy of buying after stock splits might test the effect of having purchased 500 additional shares in the large-cap stocks in a hypothetical portfolio each time one of the stocks split during the period from 1957 to the present.

Back testing is sometimes used to support a current investment strategy by demonstrating that it would have enjoyed strong past performance. Critics point out that the testing period that's chosen has a significant impact on the results and that past performance doesn't guarantee future returns.

References in periodicals archive ?
A stronger regulatory focus on managing interest rate risk on the balance sheet has brought to the forefront the requirement that institutions back test their IRR models.
ITD Lookback[TM] enables legal, risk and compliance groups to back test employee trades, company proprietary trades or discretionary trades for clients, or combination, against its database of market moving issuer events currently used in its single stream risk and compliance platform.
The charting alerts and back testing have also received an overhaul making it easier to set up alerts using more variables and then run back test against them.
Police have yet to get back test results on hair taken from a duffel bag and saliva found on a pillow in the car.
Then viewing the back test report based on the drawdown priority will highlight those strategies most likely to preserve the account while still producing some growth.
Some performance data for the Wisdom Tree Indexes is based on a back test, i.
Several key factors of a scoring or success index can aid an investor to find a strong safe investing strategy when performing a back test," Dominick added.
Shift Theory Ratios are the first and only indicators that back test profitably across most markets.
PERTH, Scotland -- The numbers speak for themselves in the back test results announced by recently launched StocksMonthly.
Just back test the total collection of 14,022 active and inactive stocks in Research Wizard and see that these 14,022 stocks combined compounded 7436%/year with a maximum drawdown of -26% over the past 12 years.
1) Make watch lists of 50 to even 1000 stocks; back test them over the past dozen years.