Black Box Model

AAA

DEFINITION of 'Black Box Model'

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

Black Box Model

INVESTOPEDIA EXPLAINS '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. Solvency Cone

    A model that considers the impact of transaction costs while ...
  2. Financial Modeling

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

    The output of a credit-strength test that gauges a publicly traded ...
  4. Black Scholes Model

    A model of price variation over time of financial instruments ...
  5. Monte Carlo Simulation

    A problem solving technique used to approximate the probability ...
  6. Heath-Jarrow-Morton Model - HJM ...

    A model that applies forward rates to an existing term structure ...
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 ...
  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 ...
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

    The Top 10 Hidden Factors Affecting Software Stocks

    Want to invest in software? Here are the most important factors affecting profits, revenues, and stock price of software companies
  5. Investing Basics

    What is the Stock Market?

    A stock market is where shares in corporations are issued and traded. Stock markets are key components of a free market economy.
  6. Investing

    Commercial Paper

    Commercial paper is a short-term debt security issued by financial companies and large corporations. The corporation promises the buyer a return, or profit, for making the loan. The return is ...
  7. Trading Strategies

    Is 'Big Blue' Now Black And Blue?

    IBM once dominated the technology sector. Those days are long gone, but does IBM still present a good value play? Are dividends the answer?
  8. Investing

    The Top 10 US Software Companies

    Want to invest in top software companies listed in the US? Here is a list to get you started.
  9. Investing Basics

    Why Do Penny Stocks Fail?

    Penny stocks are speculative and highly risky investments. Lack of government and stock exchange oversight and general information leaves penny stock investors open to sudden losses.
  10. Economics

    The Top Medical & Healthcare Software Companies

    These are the top medical software companies--a growing and dynamic market ripe for investing.

You May Also Like

Hot Definitions
  1. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  2. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  3. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  4. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  5. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  6. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
Trading Center