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5 minute read

Writing strategies

Tenachine reads strategies in plain English. The clearer you are, the better the backtest. Here's the recipe.

The four-line recipe

  1. 1

    Pick your universe

    List the tickers you want to test on. Five to ten is plenty for a first pass.

    AAPL, MSFT, NVDA
  2. 2

    Say when to enter

    Describe the buy condition with one or two indicators you actually understand.

    Buy when RSI(14) crosses above 30 and price is above the 200-day moving average.
  3. 3

    Say when to exit

    Every entry needs an exit. Use a profit target, a stop, a time limit, or a clean opposite signal.

    Sell when RSI(14) crosses above 70, or after 20 trading days, whichever comes first.
  4. 4

    Add sizing (optional)

    Default sizing risks 1% per trade. You can override it if you have a reason.

    Risk 1% of equity per trade with a stop at the 20-day low.

A worked example

Universe: AAPL, MSFT, NVDA, AMZN, META.
Bars: daily.
Long-only.
Buy when RSI(14) crosses above 30
  and the close is above the 200-day moving average.
Sell when RSI(14) crosses above 70
  or after 20 trading days, whichever comes first.
Size: risk 1% of equity per trade,
  with a stop at the 20-day low.

That's a complete, runnable strategy. Tenachine will fill in sensible defaults for anything you leave out.

Three rules of thumb

Start small

One indicator in, one indicator out, ten symbols, three years. Get a result before you complicate it.

Iterate, don't overfit

Tweak one rule at a time. If you change three things together you won't know which one moved the needle.

Be specific

“Buy when momentum is good” won't work. “Buy when 12-week return is in the top 20% of the universe” will.

Want the deep dive?

Indicator catalogue, sizing maths, and common pitfalls.

Open guidelines