Signal Validation

Statistical methods for validating trading signals before deployment.

When to Activate

• Developing new trading signals
• Evaluating signal predictive power
• Running backtests and analyzing results
• Making Go/No-Go decisions on signals

Core Principle

No signal goes live without statistical validation. Every signal must demonstrate:

• p-value < 0.05 (production) or < 0.10 (development)
• Sufficient sample size (n > 100)
• Positive expected value after fees

Validation Framework