Definition of the term Back Testing.
Term
Back Testing
Usage
Technichal Analysis, Trading Software, Trading Tools
Context
Answers questions: What does back testing mean? Define back testing. When should I do back testing? Explain back testing.
Definition of Back Testing
Back testing refers to the activity of testing an Indicator or Trading System on historical prise and/or volume data of a security.
Back testing is done in order to see how accurate the tested trading system or indicator gives profitable signals of buy and sell for the underlying security. It’s very common to compare the outcome to other trading systems or simply against a buy-and-hold position.
There are a number of back testing platforms (technichal analysis software) available in the market today.