> > It is like with people, if you really want someone to understand > something, you will teach him (presenting examples > is one approach for teaching). But at the end you want to know whether > he really understood (i.e., got the principles > and is able to use them to solve knew problems) or whether he just > memorized. The only way to find this out is to show him s.th. he has > not seen before...
That's a good analogy, and it does demonstrate the benefits of the out- of-sample testing. However, it also illuminates the trap. Let's take your example and modify it a little. Let's say you are teaching a child to read in English. She made a good progress thus far, so you decide to test whether she *really* learned how to read. You present a test, which happens to be a Japanese poetry piece. Naturally, the child gets an "fail" on that test, and so do you as a teacher. The same thing may happen with your "in-sample, out of sample" approach. If your in-sample is too short, your system may learn the patterns while the market was "speaking" English, and apply those patterns when the market shifted to speaking Japanese. -- You received this message because you are subscribed to the Google Groups "JBookTrader" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/jbooktrader?hl=en.
