Parameter plateau, not parameter peak

I used to call this the wiggle test, which undersold it. The thing you are looking for has a better name: a parameter plateau. The idea is the same but the image is more useful. You are not trying to find the highest point on the surface. You are trying to find a flat region, somewhere the results barely change as you move the setting around, because a flat region means the parameter is describing something with a shape, and a peak means it's describing a coincidence in this particular sample. Practically it changes what I do with the result. I no longer take the best-performing value. I take the middle of the widest flat region, even when a sharper setting nearby tested better. The sharper one will not survive contact with a different period, and I've stopped pretending otherwise. If your surface has no plateau anywhere, that's a result too: the parameter isn't real and you should remove it rather than tune it.
BacktestBetty
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4 replies

DataDrivenDee· Jul 2026 ago
"If there's no plateau, remove the parameter rather than tune it" is the conclusion I never drew and should have.
H
HalfKelly· Jul 2026 ago
Taking the middle of the plateau instead of the peak costs you backtest performance and buys you live performance. That trade is almost always worth making.
D
DrawdownDave· Jul 2026 ago
I spent a whole winter optimizing a lookback that turned out to be a single spike on the surface. Two settings either side of it were garbage and I somehow read that as 'precision'. Live it did exactly what the neighbors did, not what the peak did. Expensive way to learn the word plateau.
L
LurkerLee· Jul 2026 ago
How wide does a flat region have to be before you trust it? Like a % of the parameter's range, or just eyeballing the surface?
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