What you will learn
- Frozen rules
- Independent review
- Model limitations
- Retirement criteria
Frozen rules
Governance defines who can approve a candidate and what evidence is required. Separate research exploration from acceptance criteria. A successful demonstration should not automatically change operating behavior.
Independent review
Record the model's intended use, limitations and dependencies. A validation result for one instrument, horizon or cost setting does not automatically transfer to another. Changes in use can require new evaluation.
Model limitations
Monitor data quality and behavior after implementation using predefined measures. Drift detection is not a guarantee of timely failure prediction. Define what happens when monitoring itself becomes unavailable.
Retirement criteria
Retirement criteria identify when a model should stop being used or return to research. They may involve invalid assumptions, persistent operational defects or a failed evidence review. Preserve outcomes and records even when the model is retired.
Worked example
A model validated on daily data is moved to intraday trading without new execution assumptions. The original validation does not cover the new latency, spread and observation regime.
Try it yourself
Write a change-of-use review identifying which evidence can transfer and which must be regenerated.
Show the worked solution
Basic code components may remain reusable, but timing, data quality, costs, labels and decision performance need review for the new use. Document the boundary instead of treating the old approval as universal.
Apply this to your course project
Create a preregistered validation protocol and report rejected variants.
Keep the calculation inputs, assumptions and decisions with your work. Practical exercises are self-reviewed; the scored knowledge checks assess the questions shown, not an independent certification of practical competence.