Does Backtesting and Data Mining Work?
According to Investopedia.com, backtesting is “The process of testing a trading strategy on prior time periods. Instead of applying a strategy for the time period forward, which could take years, a trader can do a simulation of his or her trading strategy on relevant past data in order to gauge its effectiveness.” Essentially, backtesting and data-mining are just modern buzzwords for studying stock market history. And if you have not been a student of the markets for a good period of time you are highly unlikely to ever be a good investor, advisor, or analyst! You’ve now come to realize that different market segments gain and lose momentum in a dynamic economy. And all you are going to do is continually attempt to move into the investment with the most positive momentum. An extremely simple concept that is delivered to you in a simple to learn and easy to use software package.
