Confidence interval
A range around an estimate showing how far off it could plausibly be. A 95% interval is roughly the estimate plus or minus two standard errors.
In plain English
'95%' describes the method: if you repeated the study many times, about 95% of the intervals built this way would contain the true value. More data makes the interval narrower. If an interval for a difference includes zero, the difference might not exist.
Uncle Gary explains
Cousin Kevin asks 9 friends how many pints they drink on a night out. The average is 4, but the 95% confidence interval runs from about 2 to 6. His tutor also notes that they are his friends.
Why it matters for your money
A strategy with an exciting average profit per trade but an interval that includes zero hasn't shown it makes money at all.
Where we tested it
- Lesson 9: Between Two and Six Pints: Confidence Intervals
- Lesson 22: Statistically Significant Doesn't Mean Important: Effect Size
Related terms
All glossary terms. Educational content, not financial advice.