Skip to main content
Learn

What Is ‘Overfitting’ in a Trading Model?

Overfitting is when a model is too tailored to historical data, performing well in the past but failing live.
Greeks.Live17.11.25

What Is ‘Overfitting’ in a Trading Model?

Overfitting occurs when an algorithmic trading model is too closely tailored to the specific noise and random fluctuations of the historical data used for backtesting. This results in a model that performs exceptionally well on past data but fails to generalize and performs poorly when introduced to new, live market data.

Differentiate between Historical Volatility and Implied Volatility
What Is ‘Backtesting’ and What Are Its Main Limitations?
What Is the Role of Historical Volatility in Options Pricing Models?
Differentiate between Historical and Hypothetical Stress Testing Scenarios

About

Contact

Editorial Policy

Terms of Service

Privacy Policy

Cookie Policy

© 2025 Greeks.Live

All Rights Reserved

Greeks.Live RFQ

Build by Noo on Engine

Source: The content on this website is produced by Greeks.live's proprietary analysis systems, which utilize advanced Large Language Models (LLMs). This information might not be subject to a full human review before publication and may contain errors.
Responsibility: You should not make any financial decisions based solely on the content presented here. We strongly urge you to conduct your own rigorous due diligence and to consult a qualified, independent financial advisor.
Purpose: All information is intended for informational purposes only. It should not be construed as financial, investment, trading, or any other form of professional advice. News and data are not trading signals.
Risk: The cryptocurrency, derivatives, and options markets are highly volatile and carry significant risk. By using this site, you acknowledge these risks and agree that Greeks.live and its affiliates are not responsible for any financial losses you may incur.