Adrian Reid explains the first step in trading system development: generate and document hypotheses you can encode as rules. He emphasizes producing a large bank of ideas (e.g., in OneNote), capturing every idea without worrying about immediate testing, and later prioritizing which hypotheses to test.
The first step in the process is to imagine, conceptualize something that you can form into some rules. Okay? This is the hypothesis generation. Just like in trading, a lot of the systems you try and develop will be losers, and you just throw them away and then you move on to the next one. So we got to get into a routine, a rhythm of come out with ideas, writing them down, and just building this bank of ideas so that when we go to test our own ideas, we've got a bank of hypotheses to draw from. Okay? So I've got, in my OneNote folder, for. For trading systems, I got hundreds and hundreds and hundreds of hypotheses that I will, I want to test ultimately. And as you dream up these ideas, you should be writing these down as well. Don't limit your idea generation by how quickly you can test those ideas. It's great to decouple them because some ideas are going to be better than others. Sometimes you're going to be really interested in one idea and not so interested in another. So my approach is whenever I have an idea, I just dump it down. I don't worry about whether I've got time to test in the next six months. I just write the idea down so it's captured. And then when I do have time to test, I go look through my list of ideas and I try and prioritize them.
Sam.
