Glossary.
The vocabulary of systematic, evidence-based investing, explained in plain English — each term with a worked example and no assumed background. These are the ideas the free course teaches you to use.
- Sharpe ratioThe Sharpe ratio measures how much return an investment earned for the amount of risk it took, so two investments can be compared fairly.
- VolatilityVolatility measures how much an investment’s returns move around from one period to the next, and it is the most common way risk is measured.
- BacktestingA backtest applies a set of trading rules to historical data to show how a strategy would have performed — a useful test, and a limited one.
- OverfittingOverfitting is when a strategy’s rules have been tuned so closely to past data that they capture noise instead of a real pattern, and then fail on new data.
These terms are a starting point. The course is the method.
Our free course, Evidence-Based Investing for Everyone, teaches you to build an investment strategy and test it the way a professional would before trusting it — with no programming and no prior statistics.
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