• Has a new trading idea to explore
• Wants to document an existing strategy
• Needs to formalize a trading approach
• Asks "how do I research this strategy?"
• Wants to validate a trading edge
• Needs to create a strategy document
• Is refining or improving an existing strategy

🗣 Say: "Let me ultrathink the fundamental edge hypothesis before we document this strategy."

• Why would this edge exist in efficient markets?
• What market participants create this inefficiency?
• Why hasn't this edge been arbitraged away?
• What's our edge over professional traders?
• What assumptions am I making about market structure?
• Is this a real edge or data-fitting coincidence?
• What market regime change would invalidate this edge?

• Edge based on single indicator or pattern
• Works only in specific historical period
• No clear explanation WHY it should work
• Requires perfect timing or execution
• Based on curve-fitting or optimization

1. What is the edge?
   • What market inefficiency are you exploiting?
   • Why should this strategy make money?
   • What gives you an advantage over other market participants?
2. Market conditions where it works:
   • Trending or ranging markets?
   • High or low volatility environments?
   • Specific market phases (accumulation, markup, distribution, markdown)?
   • Time of day or session considerations?
3. Why should this work?
   • Is there a logical basis (behavioral finance, liquidity patterns, etc.)?
   • Has it been observed repeatedly?
   • What is the underlying market mechanism?

• Based on curve-fitting or cherry-picked examples
• Works only in very specific historical periods
• No logical explanation for why it should work
• Too complex (many conditions = overfitting risk)
• Requires perfect timing or execution

• Technical indicators and their values
• Chart patterns or price action setups
• Confirmation requirements
• Timeframe considerations
• Confluence factors (multiple signals aligning)

Enter LONG when:
1. Price is above 200-day MA (daily timeframe)
2. RSI crosses above 50 (4H timeframe)
3. MACD histogram turns positive (4H timeframe)
4. Price breaks above prior swing high with volume > 1.5x average
5. All conditions must align within 4 candles

• Fixed target (e.g., 2% gain, $100 move)
• Technical target (resistance, measured move, Fibonacci)
• Trailing stop mechanism
• Partial profit-taking rules

• Fixed stop distance (e.g., 1% below entry)
• Technical stop (below support, below entry candle low)
• Time-based stop (exit if no progress after X periods)
• Volatility-based stop (e.g., 2x ATR)

Exit Rules:
- Stop Loss: Below entry candle low OR 1.5% from entry (whichever is closer)
- Target 1: Risk 1:2 ratio (take 50% position off)
- Target 2: Risk 1:3 ratio (take remaining 50% off)
- Trailing Stop: After Target 1 hit, move stop to breakeven
- Time Stop: Exit at market close if still in trade

• Fixed % of capital (e.g., 1% risk per trade)
• Fixed dollar amount (e.g., $100 risk per trade)
• Volatility-adjusted sizing (larger positions in low volatility)

• Max simultaneous positions
• Max correlated positions
• Max sector/market exposure

Risk Management:
- Risk 1% of account per trade
- Maximum 3 simultaneous positions
- No more than 2 positions in same sector
- Calculate position size: (Account Size × 1%) / (Entry - Stop Loss)

• Chart timeframe for entries (1H, 4H, Daily, etc.)
• Higher timeframe for context
• Lower timeframe for precision entries

• Which assets does this work on? (stocks, crypto, forex, commodities)
• Specific instruments or broad applicability?
• Liquidity requirements

• Avoid during low liquidity periods
• Avoid during major news events
• Avoid in choppy/ranging markets (if trend strategy)
• Avoid in trending markets (if mean-reversion strategy)

🗣 Say: "Let me ultrathink the edge validation before confirming this strategy is viable."

• Am I rationalizing because I want this to work?
• What's the strongest argument AGAINST this strategy?
• Would I trade this with real money today?
• What do I know that the market doesn't know?
• If this edge is real, why aren't others exploiting it?
• What's my confirmation bias hiding from me?
• What would change my mind about this edge?

1. Positive Expectancy Check:
   • If win rate is X%, is average win > average loss enough to be profitable?
   • Example: 40% win rate needs avg win > 1.5x avg loss to break even
2. Execution Feasibility:
   • Can this be executed with reasonable slippage and commissions?
   • Is there sufficient liquidity for your position sizes?
   • Are you able to monitor and execute during required hours?
3. Psychological Feasibility:
   • Can you handle the expected drawdown?
   • Is the win rate psychologically tolerable?
   • Can you follow the rules consistently?
4. Market Regime Dependency:
   • Does this require specific market conditions?
   • What happens when market regime shifts?
   • How will you know when to stop trading it?
5. Backtest Considerations:
   • Sufficient historical data available?
   • Sample size large enough (ideally 100+ trades)?
   • Transaction costs and slippage included?

• [Condition 1]
• [Condition 2]
• [Condition 3]

• [Condition 1: e.g., Daily trend is bullish]
• [Condition 2: e.g., Price above 200 MA]

1. [Indicator/Pattern requirement]
2. [Confirmation requirement]
3. [Timeframe alignment]

• Order Type: [Market/Limit/Stop]
• Timing: [Immediate/Wait for candle close/Next candle open]

• Placement: [Specific rule]
• Type: [Fixed/Technical/Trailing]
• Maximum Risk: [% or $]

• Target 1: [Level/Ratio] - [% of position]
• Target 2: [Level/Ratio] - [% of position]
• Target 3: [Level/Ratio] - [% of position]

• Risk per trade: [% or $]
• Calculation method: [Formula or approach]

• Max simultaneous positions: [Number]
• Max correlated positions: [Number]
• Max sector/market exposure: [%]

• Daily loss limit: [% or $]
• Weekly loss limit: [% or $]
• Strategy pause threshold: [Condition to stop trading]

• Trade when: [Market conditions]
• Avoid when: [Market conditions]

• Trade during: [Sessions/Hours]
• Avoid during: [Sessions/Hours/Events]

• Minimum volatility: [ATR or other metric]
• Maximum volatility: [ATR or other metric]

• Time period: [Date range]
• Minimum sample size: [Number of trades]
• Markets to test: [List]

• Win rate
• Average win vs average loss
• Profit factor
• Sharpe ratio
• Maximum drawdown
• Average trade duration
• Expectancy per trade

• Minimum win rate: [%]
• Minimum profit factor: [Number]
• Maximum drawdown: [%]

• Strategy fully documented
• Backtested with sufficient sample size
• Positive expectancy confirmed
• Risk management rules defined
• Execution plan created
• Code/indicators set up (if automated)

• Run strategy in paper trading for [X weeks/months]
• Track all trades in journal
• Verify execution matches backtesting
• Confirm psychological readiness

• Start with minimum position size
• Gradually scale up after [X] successful trades
• Review performance weekly
• Adjust if market regime shifts

• v1.0 ([Date]): Initial strategy documentation

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1. Start with the Edge
   • "What market inefficiency are you trying to exploit?"
   • "Why should this make money?"
2. Define Entry Rules
   • "What exactly triggers an entry?"
   • "What confirmations do you need?"
3. Define Exit Rules
   • "Where is your stop loss?"
   • "What are your profit targets?"
   • "How do you manage the trade?"
4. Risk Management
   • "How much do you risk per trade?"
   • "What are your exposure limits?"
5. Validate the Edge
   • "Is this executable?"
   • "Does it have positive expectancy?"
   • "Can you backtest it?"
6. Document Everything
   • Use Write tool to create the strategy document
   • Include all rules and conditions
   • Set up backtest plan

strategies/[strategy-name].md

• Lowercase with hyphens:

  rsi-oversold-uptrend.md

• Location:

  strategies/

  directory (create if doesn't exist)
• Format: Markdown (.md)

1. Simplicity over complexity: Fewer rules = less overfitting
2. Logical edge: Must have a reason why it works
3. Clear rules: No ambiguity in entry/exit
4. Risk-first mindset: Define risk before profit targets
5. Testable: Strategy must be backtestable
6. Executable: Must be tradeable with real market conditions

• Vague rules ("enter when momentum is strong")
• Too many conditions (likely overfitted)
• No logical edge explanation
• Unrealistic expectations (90%+ win rate claims)
• No risk management defined
• Can't be backtested objectively

1. What timeframe are you using for RSI?
2. What RSI level defines 'oversold' (30? 20?)?
3. What market conditions does this work in (trending up? ranging?)?
4. Where would you place your stop loss?
5. What's your profit target?
6. Why should this work? (What's the underlying edge?)