Curve Fitting (Overfitting)

Curve Fitting - The practice of excessively optimizing a trading system to fit past data so closely that it loses the ability to perform well on new data. Curve fitting in backtesting refers to adapting a trading strategy so tightly to historical quirks that it becomes ineffective in the future. An overfitted forex robot might show stellar backtest results but fail in live trading because it was tuned to noise rather than true market patterns.