How To Identify Overfit Trading Strategies

Channel:

Darwinex

Subscribers:

44,800

Published on November 22, 2017 11:35:36 PM ● Video Link: https://www.youtube.com/watch?v=Ise2TWgLVBE

Category:

Guide

Duration: 16:00

2,869 views

51

In this video, we describe the main features and behaviours of overfit trading strategies. Brought to you by Darwinex: https://www.darwinex.com/?utm_source=youtube&utm_medium=video-description-above-fold&utm_content=how-to-identify-overfit-trading-strategies-video

Risk Disclosure:
https://www.darwinex.com/legal/risk-disclaimer

We also shed light on the risks they pose to both traders and DARWIN investors.

Blog Post Link:
http://blog.darwinex.com/identify-overfit-trading-strategies/

Overfit trading strategies typically perform well in backtesting environments, creating the illusion that they exploit the market inefficiency being targeted, really well.

However, when deployed in a live trading environment, their performance is disproportionately different to what was observed in backtesting, due primarily to their modeling historical data too closely.

This prevents such strategies from generalizing well to unseen data in future, to the detriment of both the traders (launching them live with capital) and DARWIN investors (backing them with capital).

Presentation Agenda:
--
1) Introduction
2) Types of Overfit Trading Strategies
3) Typical Features & Behaviours
4) How Traders Can Address Overfitting
5) How Investors Can Avoid Overfit DARWINs.