Investor Glossary-back testingInvestor Glossary-back testingInvestor Glossary-back testingInvestor Glossary-back testingInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Back Testing

The HTML to link to this page
 

Back testing is the examination of past performance to predict the future price of an investment. Back testing can incorporate a variety of indicators (i.e. earnings, inflation, interest rates, breadth, etc.). A simple example of back testing can be used to determine which years of the presidential cycle are best for stock appreciation? With back testing, it has been discovered that the Dow Jones Industrial Average has tended to outperform during the pre-election and election year of a presidential cycle. Increases in computing power and software sophistication have increased the ease by which an investor can perform back testing. However, when back testing, investors need to take care to ensure that the results are statistically significant and not curve fit.



Rate this back testing definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: in escrow, balance sheet, current ratio, implied volatility, ex-dividend, APR, open position, reverse mortgage, deferred revenue, real GDP, wholly-owned subsidiary, inflation, Zero Cost Collar, Key Rate Duration, average price per share, VIX, limit order, labor relations, command economy, quality assurance, LIBOR, debt service coverage, FTSE, phantom income, 1031 exchange, ex-dividend date, per diem, stock split, stock market close, minority interest, cancelled check, covered put, dividends payable, 1035 exchange, class C shares, diluted share, required rate of return, margin rate, retained earnings, EBITDA, FICO score, 144a, deferred tax, risk management, option premium, annual return, 401a, irrevocable trust, liquidity ratio


Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
Investor Glossary Index >>> # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2014 Investor Glossary - All rights reserved - Terms of Use