Algorithmic Trading Overfitting: Why Backtests Fail in Live Markets
Many algorithmic trading strategies exhibit strong performance in historical backtests high returns, favorable win rates, elevated Sharpe ratios, and limited drawdowns yet deteriorate significantly when deployed live. This discrepancy often stems from overfitting: the strategy captures noise or idiosyncrasies in the historical data rather than persistent, generalizable market inefficiencies. Empirical studies of large cohorts of […]










