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How to choose

One-liner: Given a sentence, ask three things first: is it measuring one symbol or a basket? Does it earn from trend, reversal, or calendar? How does it exit when wrong? Answer those and you know which court to use and what contract to write.

The three questions

  1. One symbol or a basket?
  2. One symbol (this coin on one bar) → event backtest

  3. A basket (score dozens of coins every day) → cross-section backtest

  4. Trend, reversal, or calendar?

  5. Trend (follow MAs, momentum) → treat as beta first
  6. Reversal (buy dips, sell rips) → alpha or fat-tail

  7. Calendar (Monday, month-end, specific dates) → alpha

  8. How does it exit when wrong?

  9. Breaks a line → trend stop
  10. Fixed number of days → time stop
  11. Opposite signal → signal stop

An example

“When BTC leads, AI alts follow”:

  1. Measures cross-symbol lead-lag (BTC → AI alts) → event backtest, but needs features from two symbols.
  2. Earns from trend (lead-follow) → treat as beta first.
  3. Exit when wrong → BTC breaks a line, or the AI alt breaks its own line.

Fine print