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


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use