Jumping from a chart pattern you noticed last week to live capital is how accounts get humbled. A tighter path is idea → explicit rules → backtest → stress → paper trade → (maybe) live.
This workflow is platform-agnostic. The discipline matters more than the tool.
Step 1: Write the idea as rules
Replace "buy strong tech" with testable statements:
- Universe: Which symbols qualify?
- Signal: What condition triggers action? (momentum, mean reversion, filter, etc.)
- Action: Enter, exit, or rebalance to target weights?
- Schedule: How often can the system trade? (rebalancing, execution time)
If you cannot write it in bullet form, you are not ready to backtest.
Step 2: Backtest with honest defaults
Run a first backtest with:
- A defensible start date and full indicator warmup
- Realistic commissions and slippage
- A benchmark for beta context
Read CAGR vs total return, max drawdown, and Sharpe on the same window.
Kill ideas that only work at zero cost.
Step 3: Stress the story
Ask what breaks the narrative:
- Walk-forward or held-out recent years
- Monte Carlo on return order or trade sequence
- Alternate rebalance frequencies
Change one variable at a time so you know what drove the result.
Step 4: Automate paper trading
Paper trading runs rules forward with simulated or broker paper fills. Validate:
- Orders fire at the intended session time
- Position sizes match the model
- Logs explain skipped or failed trades
Paper is where scheduling bugs appear, not in a historical chart.
Step 5: Review on a cadence
Set a calendar review (weekly or monthly):
- Paper vs backtest divergence - is slippage the culprit?
- Drawdown vs your personal risk tolerance
- Whether the economic story still makes sense
Only then discuss live sizing - outside the scope of this checklist, but never skip the prior steps.
Where Quantly fits
Quantly is built around this loop: visual rule design, long-history backtests, Monte Carlo, and automated paper execution on supported connections. If you want a guided tour, open the demo or join the waitlist.
Summary
Systematic trading rewards process. Five steps will not eliminate losses, but they separate research from hope - and paper trading is the last cheap lesson before real money.
