Backtesting

A journey through the annals of time, backtesting is the process of evaluating the performance of a strategy or model by applying it to historical data, allowing one to gauge its effectiveness and make informed decisions about its potential success in the future.

Example

A financial analyst might use backtesting to assess the performance of a trading algorithm by applying it to historical stock market data. By examining how the algorithm would have performed in the past, the analyst can gain insight into its potential risks, returns, and overall effectiveness, helping them decide whether to use it for future trading decisions.

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