Statistical Validation

Historical pattern discovery alone is not enough reason to trade a strategy. A tradeable pattern must show consistent mean-reverting behavior in both in-sample and out-of-sample partitions. Held-out recent data is the minimum credible validation before committing capital. The described BCH results showed the same directional relationship in both validation partitions. The data split must be chronological rather than random to avoid leaking future information into training. Crypto assets are non-stationary and can undergo structural regime changes that alter return distributions.