The overfitting trap
It's easy to find parameters that looked perfect in the past. The hard part is knowing whether you found a real edge or just fit the noise. This is the most important lesson in the Academy.
The past is easy to fit
Any market has thousands of coincidences. Search hard enough and you'll find an RSI level and a timeframe that would have printed money on that exact history. That doesn't mean it will repeat; it means you found a pattern in the noise.
The sweep exposes it
Run this, then open Robustness and Parameter sensitivity (on Power and above). Sweep the RSI levels and watch the Deflated Sharpe on the board fall away from the raw Sharpe: it discounts your result by how many settings you tried. A big gap between the two is the tell that the edge was mostly search luck. The overfit probability needs a grid of settings, so run a Joint sweep when you want that number as well.
Run it live
The strategy for this lesson, in plain English:
“Buy ETH when RSI drops below 30, sell when RSI rises above 70, on the 4 hour chart, last 3 years.”
It opens already parsed, so you can read the rules before you spend a run.
Key takeaway
Never trust a single backtest. A robust edge survives the sweep; an overfit one collapses under the Deflated Sharpe.
Terms in this lesson
Check yourself