Navigating the intricate world of trading requires a keen understanding of risk and strategy evaluation. In this section, we unravel the nuances of various metrics that provide valuable insights into our trading strategies, empowering us to optimize and minimize risks. 1. Accuracy: – The accuracy metric, also known as the hit ratio, is a straightforward …
Performance evaluation holds paramount importance in the trading framework, as it provides a basis for assessing the effectiveness of models and strategies. Evaluating a model’s performance involves considering key metrics during the out-of-sample period. This section explores three crucial characteristics: consistent low-volatility results, stable accuracies through time, and the incorporation of economically intuitive robust features. …