Posts Tagged: overfitting

Given enough flexibility, you can draw a curve through almost any set of points — including pure noise. Here’s what that has to do with a trading strategy that looks perfect in backtesting, and a simple visual check you can run yourself.

A backtest can look flawless and still be worthless. Here’s how overfitting happens, why it’s so easy to do by accident, and the specific tests that catch it before real money is on the line.