Black Box Model

What is a 'Black Box Model'

A black box model is a computer program into which users enter information and the system utilizes pre-programmed logic to return output to the user.

Black Box Model

BREAKING DOWN 'Black Box Model'

The "black box" portion of the system contains formulas and calculations that the user does not see nor need to know to use the system. Black box systems are often used to determine optimal trading practices. These systems generate many different types of data including buy and sell signals.

RELATED TERMS
  1. Financial Modeling

    The process by which a firm constructs a financial representation ...
  2. Altman Z-Score

    The output of a credit-strength test that gauges a publicly traded ...
  3. Solvency Cone

    A model that considers the impact of transaction costs while ...
  4. Model Risk

    A type of risk that occurs when a financial model used to measure ...
  5. Intelligent ETF

    An exchange-traded fund (ETF) that employs an active investment ...
  6. Formula Investing

    A method of investing that rigidly follows a prescribed theory ...
Related Articles
  1. Options & Futures

    Quant Strategies - Are They For You?

    Using the power of modern computers and the input of many financial experts, these models automatically execute trades for you.
  2. Active Trading

    How To Survive The Trading Game

    Gain insight into how a trader/programmer approaches the task of designing a trading system.
  3. Trading Systems & Software

    Basics Of Trading Systems

    A trading system can save time and take the emotion out of trading, but adopting one takes skill and resources - learn more here.
  4. Investing News

    Apple Stock In Bearish Terrain Ahead of Earnings (AAPL)

    Apple is down 21.4% from its 52-week high of $134.54 reached last April, putting it in bearish territory ahead of Tuesday's earnings.
  5. Fundamental Analysis

    4 Signs It's Time to Fire Your Financial Advisor

    Financial advisors provide valuable advice, but if your advisor communicates poorly, then it may be time to fire them.
  6. Investing Basics

    A Breakdown on How the Stock Market Works

    Learn what it means to own stocks and shares, why shares exist, and how you buy and sell them.
  7. Investing News

    What Could Hurt the Recent Turnaround in Stocks?

    Falling oil prices, bad corporate earnings and a rancorous election season hasn't done much to blunt the rally in stocks. Whether that lasts, depends.
  8. Investing Basics

    3 Investment Fees That Are Negotiable

    Investment fees are a necessary evil but that doesn't mean they have to be overly costly. There are ways to negotiate some of the expenses down.
  9. Investing Basics

    DIY Annuities: What You Need to Know

    Annuities are attractive because they can give you a stream of income, but they can be tricky to buy.
  10. Economics

    Understanding Game Theory

    Game theory is a model for making decisions that weighs the benefits of a choice along with the interaction between participants.
RELATED FAQS
  1. What is the best method of analysis for forex trading?

    Types Of Analysis Used In ForexForex analysis is used by the retail forex day trader to determine whether to buy or sell ... Read Answer >>
  2. I've heard some "market gurus" claim returns of up to 400% annually. Is this possible?

    To answer your question in a word: No! Although we wish such a phenomenal investment system were real, the claims you speak ... Read Answer >>
  3. Do hedge funds have ticker symbols?

    Discover whether or not hedge funds have ticker symbols, where you can find ticker symbols and the significance of a ticker ... Read Answer >>
  4. What is finance?

    "Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process ... Read Answer >>
  5. What is the difference between positive and normative economics?

    Positive economics is objective and fact based, while normative economics is subjective and value based. Positive economic ... Read Answer >>
  6. Where do penny stocks trade?

    Learn where penny stocks are traded, and how investors can obtain access to penny stock trading, along with general information ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  3. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  4. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  5. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  6. Economies Of Scale

    Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because ...
Trading Center