Measurable rules, reduced emotion.
The point is not “having a bot”. It's having testable logic: entry, exit, stop, size, filters, validation and monitoring — with discretion reduced to a minimum.
Para qué sirve
Systematic trading turns a strategy into measurable rules executable consistently. Algorithmic trading uses pre-programmed instructions (price, time, volume); families include trend following, mean reversion, arbitrage, market making and execution algorithms.
| What it observes | What it measures | When it's useful |
|---|---|---|
| Explicit rules | Objective signals | Remove emotional bias |
| History | Backtest, walk-forward | Validate before live |
| Risk | Drawdown, expectancy, R-multiple | Sizing and survival |
| Execution | Slippage, latency, commissions | Backtest vs real gap |
Core concepts
| Término | In Cyclepedia |
|---|---|
| Trading system / rule / signal | |
| Entry / exit | |
| Position sizing / risk management | |
| Backtest / walk-forward / out-of-sample | |
| Overfitting / curve fitting | |
| Expectancy / profit factor | |
| Sharpe / Sortino / max drawdown | |
| R-multiple | |
| Slippage / commissions / latency | |
| Mean reversion / trend following | |
| Automation / API / bot |
Related tools
| Tool | Role |
|---|---|
| Backtesting engine | Historical data tests |
| Walk-forward analysis | Out-of-sample robustness |
| Monte Carlo | Drawdown distribution |
| Execution algos | TWAP, VWAP, smart routing |
| Portfolio rebalancing | Multi-strategy systems |
| Risk parity / vol targeting | Dynamic sizing |
Execution: Limit Order · Market Order · Matching engine
Representative traders and authors
| Figure | Contribution |
|---|---|
| Ed Seykota | Systematic trend following |
| Richard Dennis & William Eckhardt | Turtle Traders |
| Tom Basso | Portfolio of systems |
| Michael Covel | Documented trend following |
| Andreas Clenow | Modern trend systems |
| Ernest Chan | Retail quant |
| Perry Kaufman | Adaptive systems |
| Robert Pardo | Strategy evaluation |
| Larry Connors | Short-term mean reversion |
| Marcos López de Prado | ML finance, overfitting |
| Jim Simons / D.E. Shaw | Institutional quant |
| David Harding | Systematic CTA (Man AHL) |
Recommended path
- Trade idea — idea vs written rule
- Quantitative trading — quant overview
- Backtest — introduction to backtesting
- Expectancy · Drawdown — core metrics
- Overfitting — main pitfall
- Position sizing — sizing and survival
- Paper trading · Forward test — live validation
Foundation: Silver path · Gold path · mindset: Psychology.
Enlaces
- Metodologías — how to build a method (Encyclopedia area)
- AI, Big Data & Quantum Finance — ML and advanced models
- Glosario — systematic and risk terms