Hypothesis Tests and Confidence Intervals
The following excerpt is from Chapter 5 of David Aronson's recently published book "Evidence-Based Technical Analysis". Together with Chapters 4 and 6 of the book it addresses aspects of statistics that are particularly relevant to evidence-based (as opposed to subjective) technical analysis.
TWO TYPES OF STATISTICAL INFERENCE
Statistical inference encompasses two procedures: hypothesis testing and parameter estimation. Both are concerned with the unknown value of a population parameter. A hypothesis test determines if a sample of data is consistent with or contradicts a hypothesis about the value of a population parameter, for example, the hypothesis