Strategy Hypothesis Template¶

Instructions¶

Complete this template BEFORE writing any code. A well-formed hypothesis prevents wasted development and provides audit traceability.

Hypothesis Document¶

1. Strategy Identification¶

2. Core Hypothesis¶

Statement (one sentence):

[Describe the market inefficiency you believe exists and how you will exploit it]

Example:

"Liquidity sweeps below swing lows followed by market structure shifts indicate institutional accumulation, providing high-probability long entries with defined risk."

3. Edge Source¶

4. Market Applicability¶

Primary Timeframes: [ ] 1m [ ] 5m [ ] 15m [ ] 1H [ ] 4H [ ] Daily

5. Entry Rules¶

Setup Conditions (all must be true): 1. 2. 3.

Trigger:

[Specific condition that initiates entry]

Entry Price:

[Market / Limit at X / Stop at X]

6. Exit Rules¶

Stop Loss:

[How is SL determined? Fixed pips, ATR-based, structure-based?]

Take Profit: | Level | Target | % of Position | |-------|--------|---------------| | TP1 | | | | TP2 | | | | TP3 | | |

Time Exit:

[Max bars in trade? Session close?]

7. Position Sizing¶

8. Expected Performance¶

Basis for Expectations:

[Prior research, similar strategies, theoretical calculation]

9. Assumptions¶

List all assumptions that must hold for strategy to work:

1. [ ]
2. [ ]
3. [ ]

10. Known Risks¶

11. Prior Art¶

Similar Strategies: - [Name/Source]: [How is yours different?]

Academic References: - [Paper/Book]: [Relevant finding]

12. Success Criteria¶

The hypothesis is VALIDATED if: - [ ] Backtest Sharpe > X on in-sample - [ ] OOS degradation < 30% - [ ] Walk-forward consistency > 60% - [ ] Passes all anti-bias tests

The hypothesis is INVALIDATED if: - [ ] Backtest Sharpe < X - [ ] Max DD > X% in backtest - [ ] Anti-bias tests fail - [ ] Edge disappears with realistic costs

13. Development Plan¶

Approval¶

Revision History¶