Back test

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 ?
The 1 back and the 2 back versions of the N back test [10] were used.
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.
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Algorithmic strategies developed on 4th Story's platform can now track the performance of other strategies as they make their investment decisions, meaning trading strategists can back test the effect of different sizing techniques on the overall return of their portfolio of automated strategies.
Savvy Coleen brought back test samples from France to try out on friends, family and Wayne.
Borders bring back Test wing Craig Moir for the game with Neath-Swansea Ospreys at Netherdale, with Edinburgh aiming to arrest their recent slide at home to Munster.