Comment by bmitc
4 hours ago
This is interesting because I'm not immediately sure how you verify correctness and assess risk without also addressing profitability.
By assessing risk is that just checking that it does dump all your money and that you can at least maintain a stable investment cache?
Are you willing to say more about correctness? Is the correctness of the models, of the software, or something else?
Profitability is not in any way considered a property of the correctness of an algorithm. An algorithm can be profitable and incorrect, and an algorithm can be correct but not profitable.
Correctness has to do with whether the algorithm performed the intended actions in response to the inputs/events provided to it, nothing more. For the most part correctness of an algorithm can be tested the same way most software is tested, ie. unit tests, but it's also worth testing the algorithm using live data/back testing it since it's not feasible to cover every possible scenario in giant unit tests, but you can get pretty good coverage of a variety of real world scenarios by back testing.