Is this an instance of the “theory” bullet point then? Because the probability of the statement “trading signal XYZ works on Wednesdays, because [specific reason]” cannot be higher than the probability of the statement “trading signal XYZ works” (the first statement involves a conjunction).
It’s a combination. The point is to throw out algorithms/parameters that do well on backtests when the assumptions are violated, because those are much more likely to be overfit.
Is this an instance of the “theory” bullet point then? Because the probability of the statement “trading signal XYZ works on Wednesdays, because [specific reason]” cannot be higher than the probability of the statement “trading signal XYZ works” (the first statement involves a conjunction).
It’s a combination. The point is to throw out algorithms/parameters that do well on backtests when the assumptions are violated, because those are much more likely to be overfit.