Operator's Manual

How to read this page

Every green cutout in the manual is collected here. Each one is a replay against history — walk-forward, no hindsight, the same rules the desk runs today — and each states the coarse window and the result. What is not published is the selection rule behind a board entry; those stay inside the engine. Two eras matter most: the 2022 grinding bear and the 2020 dislocation, because most tools are only ever tested in the bull market that built them. Where a finding held in both, we say so; where it didn't, we say that too.

Alpha

How to trade it — chapter ↗

The directional exit that tested best: leave a bullish call when its Alpha closes back under 60. We made exits compete on identical fresh Strength-run entries. In the trending tape, the fixed 21-day hold earned the most in total, but the Alpha-under-60 exit kept most of that edge in less than half the time, with half the worst-case — the best return per day held. In the 2022 grinding bear, every fixed hold lost money, worse the longer you held, and this exit cut the loss by two-thirds. Robust in both weathers, so it's the rule the tracker flags: it's the directional twin of the pair book's three-Narrowing-days rule. Unlike pairs, there's no "payoff window" to wait for — the edge accrues while the run persists and stops when the score gives up 60.

Relative performance

Compare mode — chapter ↗

A red nβ is a quality caution, not a hedging to-do. In our replays, pairs entered with a large lean were the strongest cohort over the first two weeks — and the weakest by a month, with the heaviest tails of any group. A big lean usually means one leg's beta has collapsed or exploded: the pair is structurally lopsided, and its payoff is front-loaded. Cancelling the lean with a third leg didn't fix that (the lean is a tiny share of a pair's risk — removing it barely moved the book), so the tested read is simpler: on a red chip, prefer the front of the payoff window and let the Narrowing rule take you out early rather than late. Example: a red-chip pair that hasn't paid by day 10 has history leaning against it.

Reading a name

Line by line — chapter ↗

"Very Extended = chase risk" turned out to be a tape-conditional truth, not a law. We replayed fresh Strength runs by their extension at the start. In a trending tape the already-stretched names carried the edge — Very Extended starts earned about +2% over the market in three weeks while early-move starts earned nothing: momentum continuation. In the 2022 grinding bear it was the exact mirror — stretched starts were the worst cohort and discounted starts the best (bounce plays). So read Extension through the tape: chase strength when the tape is trending; in a grind or dislocation, avoid the stretched names and look where the discount is.

Hedge pairs

Why pairs — chapter ↗

In testing, wider score gaps have preceded larger forward spreads — and unlike single-name signals, the edge persisted over multi-week horizons, because market drift is out of the equation.

How to trade it — chapter ↗

Give it two weeks. In our testing, the first days of a new pair did little — the spread's gains concentrated in weeks two and three, and by about a month the typical spread had stopped growing and began to give back. Treat that as a tested expectation, not a schedule: individual pairs pay early, late, or not at all. The spread lane, not the calendar, has the final word — a spread still widening is a trade still working, whatever day it is.

How to trade it — chapter ↗

The exit that tested best: three straight Narrowing days, or about four weeks — whichever comes first. One reframe worth internalizing: this rule fires on winners too, and that's its best case — the tracker says so in words (exit with the win when you're ahead, plain tested exit when you're not). Red means "act," never automatically "bad." We made the exits compete on the same replayed trades. Cutting a pair after three consecutive Narrowing days kept the same overall return as holding a flat three weeks, in roughly a quarter less time, with a meaningfully smaller worst case. It works by asymmetry — many small early exits from pairs that die, while the ones still widening run their course. Three other results are worth as much as the rule itself: exiting the moment a pair drops off the Hedge Ideas board was far too early (conditions flicker daily — treat that as a review prompt, not an exit); price stop-losses tested worse than no rule at all, because a spread breathes with noise and a stop just locks the breathing in; and holding past four weeks gave most of the gains back. As always: a tested expectation across many trades, not a promise about any one.

How pairs enter and leave the board — chapter ↗

This is tested, not taste: in our replays, pairs retained through a wobble went on to outperform fresh entries over the following weeks — a red Tuesday that nudges a leader's score is noise, not a broken thesis. The flip side is that leaving the board now means something: when a pair departs, its thesis genuinely died (laggard truly recovered, leader truly broke, or a leg went stale). Even then, our testing says treat the departure as a review prompt — the exit that tested best remains the three-day Narrowing run on the spread itself.

How pairs enter and leave the board — chapter ↗

Timing matters too. When a sector has a violent day, the effect concentrates in the higher-beta names — after a violent surge they tend to give part of it back over roughly three weeks, and after a violent washout they tend to rebound over roughly two. So the flags name the name: a card might read ⚡ COIN headwind ~3wk — sector surged, meaning COIN specifically carries the tested drag — whether that works for or against the pair depends on which leg COIN is. The spread lane on the chart carries the same note beside its trend state, a pair tracked on such a day keeps the flag in your tracker, and the tracker tells you when a washout entry's window has passed. All of it is information, not a gate — the board's entry rules are unchanged, and the exit discipline stays the three-day Narrowing run.

Split sectors vs compressed sectors — chapter ↗

Why it matters: in our testing so far, the pairs that struggled most shared a profile — a gap that barely qualified, drawn from a compressed sector. The same modest gap inside a split sector held up better. Read it as a quality check on the whole neighborhood: a wide gap where winners and losers are everywhere is the market disagreeing loudly about business results; a narrow gap in a quiet sector may just be noise that happened to clear a bar.

The Relative ticket — a name's own basket — chapter ↗

The hedge is insurance — in the strict sense. We replayed hedged expressions against the plain directional long across twenty years of regimes. In rising tapes the hedge costs: a strong name's sector and peers are strong too, and shorting them subtracts real drift (this year, hedged expressions clearly underperformed the plain long). In flat tapes it costs a little. But when the market breaks, the ranking flips hard — in the 2020 crash the hedged forms made money while unhedged leaders took their worst losses, and in the 2022 bear hedges roughly broke even while plain longs bled. The one constant everywhere: hedged worst-cases were far smaller. So reach for a Relative expression when you need protection — overnight gaps, a tape you distrust — and accept that in calm markets that protection has a premium. If you hedge, the two-leg peer basket was the steadiest form across every era; the sector-ETF hedge protects most in a falling market but costs most in a rising one.

The tape

Trending — chapter ↗

In our twenty-year replays, pair entries made on trending days were the best cohort in every era they appeared in. The one honest footnote: hedged single-name expressions cost the most here — a strong name's sector and peers are strong too, and shorting them subtracts real drift. Trending tape = board at full strength, Relative tab as insurance only.

Flat — chapter ↗

Flat tapes tested as thin pickings: pairs held for the full window made roughly nothing (the 2015–16 replay: +0.1% per trade over two years), and nothing else did much better. Not dangerous — just unrewarding. Expect less from every idea, keep sizing modest, and let the Narrowing exit rule take you out rather than patience.

Grinding bear — chapter ↗

This is the one tape where the hedge-pair book tested weakest: in the 2022 replay, pairs held flat for the window lost about −0.8% per trade. Two things earned their keep here. The three-day Narrowing exit halved the bleed and brought the book to roughly breakeven — it matters double in a grind. And hedged single-name expressions roughly broke even while plain longs lost −2.5%. Posture: fewer, more skeptical ideas; exit on the rule without negotiation; lean on the Relative tab.

Dislocation — chapter ↗

In the 2020 replay, market-neutral pairs made about +1.8% per trade through the crash — market-neutrality doing exactly its job — and hedged single-name expressions were the best of all forms (+3 to +5%) while unhedged leaders took their worst losses (−3.4% with tails past −40%). Speed matters: dislocations resolve fast, so the exit rule and the front of the payoff window carry the edge. The board keeps running; the Relative tab moves from insurance to advantage.

The one thing the tape changes in the score — chapter ↗

Why so narrow: we replayed the alternatives. A blanket "trust bullish reads less when the tape is bad" removed the entries that actually worked — in the 2022 grind the marginal names (Alpha 60–70) did better than the strong ones. Cutting stretched names everywhere outside a trend was wrong too: in a Flat tape the stretched names were the good ones (+0.8 to +1.6% over the market in three weeks). Only one cohort was reliably bad — Very Extended bullish entries in a grind or a dislocation, about −3% vs the market in three weeks in both 2022 and 2020 while everything else sat near flat. That is the one the engine now trims.