Most traders have a strategy. Few have one that can be tested. The difference is not the idea, it is how precisely it is written. Here is a method to get from one to the other.
Every example below is generic and given for illustration. None of it is a recommendation.
The principle: one rule, one condition you can check
A rule is testable when two different people, applying it to the same chart, take exactly the same trades. If a rule needs your judgment in the moment, a backtest cannot replay it, and an agent cannot execute it.
| Vague | Testable |
|---|---|
| "The market looks weak." | "The candle closes below the lowest low of the last 20." |
| "The trend is up." | "On the 1-hour chart, price is above its 200-period moving average." |
| "I take profit when it's enough." | "Exit at 2R, or after 48 hours, whichever comes first." |
| "I don't risk too much." | "Risk 1% of capital per trade, maximum 3 open positions." |
The four blocks of a complete strategy
1. Context: when is the strategy allowed to trade?
The market conditions that must be true before you even look for an entry: a trend filter, a volatility level, a session time. Context rules mostly keep you out of the wrong trades.
2. Entry: what exactly triggers the trade?
One event you can timestamp: a close above a level, a cross, a breakout. Decide whether you enter on the close of the signal candle or the open of the next one, and stick to it.
3. Exit: how does the trade end?
Three exits cover most cases: a stop-loss (where the idea is wrong), a target (where you take profit), and a time stop (when the trade has had its chance). Write all three, even if one rarely triggers.
4. Risk: how much is at stake?
Risk per trade as a share of capital, maximum number of open positions, maximum leverage, and a daily or weekly loss limit after which you stop.
A complete generic example
- Context1-hour chart, price above its 200-period moving average
- Entrya candle closes above the highest high of the last 20
- Stopbelow the last swing low
- Target2R, or exit after 48 hours
- Risk1% of capital per trade
Five lines, no judgment calls. It may be a bad strategy, but it is a testable one, and a backtest will tell you which.
The final test
Read each rule and ask: could a program decide this with no extra information? Every "it depends" is a hidden rule. Write it down, or remove it.
Then test it honestly: with costs, on enough trades, on data you did not use while designing it. Our guide on the 4 backtest traps covers how.
How Sunia approaches it
In Sunia, you describe your strategy in your own words. The agent turns it into precise rules and asks you when something is unclear, instead of guessing. You get the five blocks above, written out, before anything is tested or traded.