strategy-framework

Strategy Framework

A standardized system for defining, documenting, testing, and managing trading strategies. This skill provides templates and tools that enforce discipline, enable reproducibility, and make strategies testable.

Why a Strategy Framework Matters

Trading without a written strategy framework leads to:

• Inconsistency: ad-hoc decisions driven by emotion rather than rules
• Untestability: vague ideas that cannot be backtested or evaluated
• Scope creep: strategies that drift without version-controlled definitions
• Unmanaged risk: missing stop losses, position limits, or drawdown halts

A strategy framework forces you to:

1. State a falsifiable hypothesis about a market inefficiency
2. Define precise, machine-testable entry and exit rules
3. Specify position sizing and risk parameters before trading
4. Set minimum performance criteria for continuation or retirement
5. Track changes through versioned strategy documents

Strategy Definition Template

Every strategy must be documented using the standard template. The full copy-paste template is in references/strategy_template.md.

Core Sections

Identity

Name: SOL-EMA-Cross v1.0
Asset class: Solana tokens (top 50 by 24h volume)
Timeframe: Primary 1H, confirmation 4H
Style: Trend following

Edge Hypothesis: State what market inefficiency you are exploiting and why it exists.

Hypothesis: Solana mid-cap tokens exhibit momentum persistence
on the 1H timeframe due to retail herding behavior and low
institutional participation. EMA crossovers capture the
initiation of these trends.

Entry Rules: Specific, testable conditions combined with AND/OR logic.

def entry_signal(data: pd.DataFrame) -> bool:
    """All conditions must be True (AND logic)."""
    ema_cross = data["ema_12"] > data["ema_26"]  # EMA 12 crossed above 26
    ema_rising = data["ema_26"].diff(3) > 0       # 26 EMA trending up
    volume_ok = data["volume"] > data["vol_sma_20"] * 1.5  # Volume confirmation
    regime_ok = data["adx"] > 20                  # Trending regime
    return ema_cross & ema_rising & volume_ok & regime_ok