User:Jennashook/Tested Analysis

Tested Analysis ...

Similar to technical analysis tested analysis is technical analysis and back testing combined.

Tested analysis differs from technical analysis such that in technical analysis practitioners use a computer to give unbiased results by inputting exact formulas on past data in order to determine exact probabilities of what the future "might" be for an instrument that is traded. Typically technical analysis is used by visual cues such as price data or derivatives of price (moving averages, etc.) This proves to troublesome taking into account the base rate fallacy.

Tested analysis approaches technical analysis from a scientific standpoint and is supported by research and back-testing. This denotes that this scientific research is only applicable to objective methods that can be replicated on historical data. Also the results produced by back-testing are calculated and criticized meticulously.