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 ?
Users can choose whether the instrument's expiration roll during the backtest, or whether risk remains constant by holding expiration constant.
Global Point-In-Time is the result of a reengineering of Compustat's previous backtest databases and collaboration with Capital IQ.
Once you've created a screen, you can then backtest it and see how your screening strategy has performed.
Once you've created a screen, you can backtest and see how the screening strategy performed.
Once you've created a screen, you can then backtest it to see how good (or bad) your screening strategy has performed.
The new arrangement allows FX Traders using our platform to create a portfolio instantly, backtest and apply the signals to their account.