026: Robert Carver talks trading rules and the dangers of over-fitting strategies [AUDIO ONLY]

Overfitting trading strategies is more dangerous than most traders realise - Robert Carver spent 7 years managing a multi-billion dollar portfolio at AHL and explains why the standard walk-forward test gives you false confidence. ► Full article: https://bettersystemtrader.com/026-ro... In this episode: • The four criteria every good trading rule must meet - and why a simple trend following rule passes all four while complex models often fail • Why there isn't much hidden alpha: the case for trading well-known persistent effects rather than searching for secrets • Why 1-year walk-forward windows are statistically meaningless, and how long you actually need • The counterintuitive finding: averaging across rule variations consistently outperforms selecting the best one 0:00 Introduction 5:33 What actually makes a good trading rule 8:19 Robert's view on alpha: there isn't much of it 11:46 The problem with walk-forward testing 17:30 Why averaging beats selecting 24:00 Continuous rules vs. binary rules 31:00 How Robert built his own system after leaving AHL 37:00 What institutional traders do differently Related episodes: • "How to avoid trading strategies that degrade quickly" - Timothy Masters:    • "How to avoid trading strategies that degr...   • 060: Strategy Optimization with Robert Pardo:    • 060: Strategy Optimization with Robert Par...   • 046: Perry Kaufman on building algorithmic trading strategies:    • 046: Perry Kaufman on building algorithmic...   Robert Carver's research on overfitting trading strategies cuts against common practice: walk-forward testing with short windows does not protect you from curve-fitting the way most traders assume. You need at least 10 years of data to make a statistically sound judgment about a rule's profitability, and averaging across parameter variations beats picking the "best" one in almost every test he ran. --- ► Better System Trader: https://bettersystemtrader.com ► Follow on X:   / bettersystrader   #SystemTrading #AlgoTrading #TradingStrategies Trading in the financial markets involves a substantial risk of loss. All content produced by Better System Trader is for informational or educational purposes only and does not constitute trading or investment advice. ---