Glossary · Performance and reporting
Backtest
A backtest is a simulation of how a strategy would have performed historically, as distinct from a live track record of actual client results.
A backtest is a hypothesis. A live record is evidence. Both can be useful and they are not interchangeable, and any presentation mixing them must say clearly which is which.
Hypothetical performance carries specific presentation requirements under the SEC's marketing rule, and those requirements exist because the failure mode here is well documented.
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