Turning an Idea Into Written Rules

"Buy the pullback in an uptrend" is not a strategy. It is a description of one, and the difference is that a strategy can be executed identically by someone who was not there when you thought of it. Everything in this track after this lesson — backtesting, forward testing, metrics — requires rules that are written down, and a surprising amount of trading failure is really the absence of that document.

What counts as unambiguous

A rule is unambiguous when applying it to a chart cannot produce two answers. The test is not whether it reads clearly; it is whether the words contain any judgement.

Every phrase on the left feels perfectly clear while you are writing it. That is the trap: the meaning is in your head, not in the sentence, so the rule can be satisfied by whatever you happen to want at the time.

Three words to search for

• "Strong", "significant", "clean", "obvious" — adjectives with no measurement behind them.
• "Usually", "generally", "ideally" — escape hatches that make every trade compliant.
• "Or" — often hiding a second rule you have not thought through.

Entry, exit, size, and standing aside

Four sections. The fourth is the one that gets skipped and the one that saves the most money.

1. Entry

1. Setup: the conditions that must hold for this to be a candidate at all.
2. Trigger: the specific event that puts the order in.
3. Order type: market, limit or stop, and at what price.
4. Timeframe: which chart every part of the above is read on.

2. Exit

1. Stop: the price, stated as a rule rather than a distance you like.
2. Target: the price, or the condition that closes the trade.
3. Time exit: if the trade has not worked within N candles or by a certain hour, what happens.
4. Management: whether the stop ever moves, and the exact rule if so. "Move to break-even when convenient" is not that rule.

3. Size

Usually one line, because Track 5 already wrote it: risk a fixed percent of the current balance, derive lots from the stop distance, round down. Add the book-level caps — per currency, total open risk, used leverage — since those constrain whether this trade is allowed at all.

4. Standing aside

The conditions under which the strategy does not trade, even when a setup appears. This is where a strategy's real edge often lives.

• Scheduled events: "no new positions within 30 minutes of a high-impact release."
• Conditions: "no entries when the daily ATR is below X" — the market is too quiet for the target to be reachable.
• Hours: "only between 07:00 and 16:00 UTC."
• After losses: the daily and monthly limits from Track 5, restated here.
• State: "not when I have had under six hours' sleep" is a legitimate rule and one of the more honest ones people write.

The readability test

The test that settles whether the rules are finished: give them to someone else, with a chart, and see whether they reach your decision.

1. Write the rules. One page. If it runs to four, it is probably not one strategy.
2. Pick ten charts you have not looked at, at a random past moment.
3. Hand both to another person — ideally one who does not trade, since they cannot fill in the gaps from experience.
4. Ask them: is this a trade? Where is the entry, stop and target?
5. Compare with your answers. Every disagreement is an ambiguity in the rules, not a mistake by the reader.

Without a willing person, the next best version is to apply the rules yourself to the same ten charts a week apart, without looking at the first answers. Disagreements with your past self are the same evidence.

Versioning the rules

Rules change — they should. What ruins the record is changing them silently, because then the results before and after are being pooled as though they came from the same strategy.

Keep a dated log. Four fields is enough:

• Why is the field that matters. A change with no stated reason is a reaction to the last few trades, and reading the log later makes that obvious.
• Change one thing at a time. Two changes at once means you cannot attribute the difference to either.
• Restart the count. Results under version 1.3 are a new sample. Track 5's hundred-trade threshold applies to the version, not to your career.
• Keep the old versions. "We tried that and it was worse" is worth having in writing.

The log has a second use that emerges after a few months: it shows whether you are developing a strategy or fleeing from drawdowns. A log with one change a quarter, each with a reason drawn from forty-plus trades, is development. A log with a change every week after a losing day is not, and nothing else in your records makes that as visible.