Signal decay due to lack of optimization

The signals used in the trading strategy are obviously one of the key aspects that drive trading strategy performance. Trading signals come with a maintenance aspect that requires them to be constantly re-evaluated and re-adjusted to stay relevant/profitable. This is partially because trading signals with constant parameters cannot perform equally well through different market conditions and require some tweaking or adjustment as market conditions change.

Sophisticated market participants often have elaborate optimization/re-fitting setups meant to continuously adjust and adapt trading-signal parameters to deliver maximum trading performance and advantages. It is important to not just find trading signals that are performing well over recent days, but to also set up a systematic optimization pipeline to adapt trading signals to changing market conditions to keep them profitable.

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