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Technical
Backtesting
Testing a strategy on historical data
Definition
Backtesting involves applying a trading or investment strategy to historical market data to evaluate its performance. While useful for strategy development, it can suffer from overfitting, look-ahead bias, and survivorship bias. Proper backtesting requires out-of-sample testing and consideration of transaction costs.
Related Topics
#strategy testing
#historical data
#overfitting
#validation
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Category: Technical
Technical analysis focuses on price patterns, chart analysis, and mathematical indicators to predict future price movements.
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