How do threshold bands reduce overtrading?

A threshold band tells the strategy not to trade unless the new signal is far enough away from the current position to matter. Instead of resizing for every tiny score drift, the system waits until the signal clears a band that is large enough to justify the cost and operational noise of another rebalance.

That does not create edge by itself. It protects an existing edge from getting spent on noise, fees, and tiny corrective trades that look elegant in a backtest but add little in live operation.

Most continuous signals wiggle more often than the underlying opportunity truly changes. Threshold bands convert that reality into a policy: ignore the wiggles, act on the moves that are large enough to change expected value after trading costs.

Start with the relationship between signal noise and trading cost, not with a magical round number. A good band is usually big enough to prevent trivial churn but small enough that the strategy still reacts before the edge is gone. The right width depends on edge half-life, volatility, and the shape of execution costs.

Check whether the improvement survives realistic slippage, whether nearby band values behave similarly, and whether the strategy is now missing too many valuable updates. A band that only works at one narrow setting may be hiding a fragile optimization instead of a robust trading rule.