What is the difference between the graphs when running Best Models and Settings, when running Optimization and the Backtesting graphs?
• Optimizing: When optimizing, no models are exchanged, no settings are changed and the optimization period is not changed. The only thing that is changed are the parameters of the models. Each model has 2-5 parameters (except ANN) which can be adapted to past price behaviour. When optimizing, parameters in the trading system are tested with different values and the combination of values that has yielded the largest historical profit is thereafter used. Notice that the goal of optimization is to find optimal parameters, not to give an estimation of future returns. Optimal parameters will almost always produce superior results for the optimized period compared to real usage of the system. • Backtesting: A backward analysis (step-by-step Back Testing) to evaluate the results of following a certain stock with a certain model and certain settings. The function simulates use of a model through day-by-day optimization a number of days backward in time in order to use the same buy and sell si
