Objective Entry and Exit Rules
An objective trading rule specifies observable conditions, when they become known, the executable action, size and exit conditions. Another person should be able to reproduce the same decisions from the same data.
How it works
State the instrument universe, timezone, data adjustment, signal timestamp, order type and handling of unfilled orders. Define precedence if an exit and entry occur together. For intrabar stops and targets, either use suitably fine data or adopt a conservative explicit execution assumption.
Worked example
A research rule might say: after a completed daily close exceeds the maximum high of the previous 20 completed sessions, submit a next-session limit order at that close; cancel at session end if unfilled. This is different from buying at the breakout day’s close with knowledge of the final close. A backtest must implement the chosen version consistently.
Amounts, prices and scenarios are fictional teaching examples. They exclude any effects not explicitly stated and are not trade recommendations.
Limits and common mistakes
Precise rules can still be unprofitable. Ambiguous order sequencing, missing sessions and unsupported short availability can invalidate results. Rule changes create new hypotheses and need fresh validation rather than retroactive credit.
Knowledge check
Why specify what happens to an unfilled limit order?
Read the explanation
Otherwise the simulator may assume a favorable execution or leave orders active indefinitely, changing exposure and overstating reproducibility.
References and further reading
These sources explain the underlying concepts and specifications. They do not endorse QBMFX Academy. Check the relevant market, protocol version and reporting rules before applying an example.