Decoded Intelligence Signal
Overfitting
advanced
strategy
Verified: May 27, 2026Lexicon Core Definition
The process of adjusting system parameters until historical backtest results appear optimal — which produces systems that perform well on past data but fail on future data because they have been optimised to historical noise rather than signal. Overfitting is identified by: excessive parameter combinations, rules specific to the test period's exact conditions, and unrealistically high win rates (>70%).
Analysis Breakdown
The process of adjusting system parameters until historical backtest results appear optimal — which produces systems that perform well on past data but fail on future data because they have been optimised to historical noise rather than signal. Overfitting is identified by: excessive parameter combinations, rules specific to the test period's exact conditions, and unrealistically high win rates (>70%). Full explanation coming soon when Journey 16 content is ingested.