Editing Technical analysis (section)

===Backtesting/Hindcasting===
[[File:Hindcasting.jpeg|200px|thumb|right|Temporal representation of hindcasting<ref>Taken from p.145 of [https://archive.org/details/TECA2004 Yeates, L.B., ''Thought Experimentation: A Cognitive Approach'',  Graduate Diploma in Arts (By Research) dissertation, University of New South Wales, 2004.]</ref>]]
Systematic trading is most often employed after testing an investment strategy on historic data. This is known as [[Backtesting#Hindcast|backtesting]] (or [[Thought experiment#Hindcasting|hindcasting]]). Backtesting is most often performed for technical indicators combined with volatility but can be applied to most investment strategies (e.g. fundamental analysis). While traditional backtesting was done by hand, this was usually only performed on human-selected stocks, and was thus prone to prior knowledge in stock selection. With the advent of computers, backtesting can be performed on entire exchanges over decades of historic data in very short amounts of time.

The use of computers does have its drawbacks, being limited to algorithms that a computer can perform. Several trading strategies rely on human interpretation,<ref>{{harvp|Elder|1993|pp=54, 116–118}}</ref> and are unsuitable for computer processing.<ref>{{harvp|Elder|1993}}</ref> Only technical indicators which are entirely algorithmic can be programmed for computerized automated backtesting.