What is testing back?
Back testing is a business strategy that includes the task of analyzing historical data related to investment opportunity. The results of the investigation are then compared with the current state of the investment. This is to determine whether there are any indications of favorable trends. Here are some information about how backward testing works, why it is important to work with accurate data and what can happen if re -testing testing is carried out incorrectly. Although it is not uncommon for no investment to be carried out by a number of simulations based on the number of stocks purchased or sold, the concept is a little deeper with backward testing. The simulations are not only on the basis of the current state of stock or share; Simulations are also carried out on the previous performance of investment. This extra mile predicting business cycles and the performance level based on the previous state will then apply to the current state of investment.
The purposeTesting is to find out whether there were similar sets of circumstances that apply to the current state of investment. If so, it can be a strong indicator of where the investment is likely to move in the future. This is especially true if the combination of past data and simulations suggests that the investment was in a similar state in many occasions in the past and tended to move in one particular direction in most simulations.
One of the dangers of recruiting is that the reliability of the results is directly related to the quality of the historical data used to operate business simulations. Incorrect or incomplete data quickly draws any attempt to test worthless. It is also important not to prevent any aspect of the investment, even if the detail may seem harmless. The more complete and more detailed data used to perform back testing, the better the chance that the simulation points to a viable conclusion about how the investment will trade in the future.
SingingTesting is not an exercise that can be performed in five minutes or less. Also, the amount of details that must be used can also be extensive. For people who want a quick response and are not interested in wading in the previous documentation of performance level, backward testing may seem like great difficulty with a very small return. However, in the case of a large investment, it is time to participate in testing testing one way to ensure that the investment is healthy and will probably grow in the future.