Overfitting
Tuning rules so closely to past data that they capture noise rather than anything repeatable.
Why it matters for AI trading tools
An AI can iterate on parameters until a backtest looks great. Out-of-sample and walk-forward tests help reveal overfitting.
Related on TraderStacks
More terms: Backtesting · Look-ahead bias · all terms
Education only. This definition explains a concept; it is not investment advice or a suggestion to trade.