# ✅ Checkpoint: Strategy Design and Backtesting

By Anh Le



## Quiz

1. Which set of slots must every testable trading rule set fill?
   - Entry, exit, and stop loss only
   - Entry, sizing, and a profit target
   - Universe, signal, and Sharpe ratio target
   - Universe, entry, exit, and sizing (plus a timing convention)
2. In the 20/60 moving average crossover example, why does the strategy not trade before bar 60?
   - The 60-day slow average is undefined during the warm-up period, so no valid signal exists
   - The 20-day average needs 60 bars to become valid
   - Trading is only allowed after the first 60 trades
   - The first 60 bars are always a holiday period with missing data
3. Your rule computes a signal from bar t's close. Where should the fill happen to avoid lookahead bias?
   - At bar t+1's open
   - At bar t's close, the same price that generated the signal
   - At bar t+1's close, after the position is marked
   - At bar t's open, before the signal is known
4. A strategy does 250 round trips per year. Slippage is 5 bps per fill and commission is 5 bps per fill. Roughly how much does execution cost per year?
   - About 25% of capital
   - About 50% of capital
   - About 12.5% of capital
   - About 5% of capital
5. The largest peak-to-trough decline in an equity curve is called the ____.
6. A backtest that looks brilliant on the exact data used to choose its parameters is suffering from ____.
7. Write the full rule set for your capstone strategy using the five slots (universe, entry, exit, sizing, timing). Then check it for ambiguity and warm-up handling.
8. Take your capstone backtest output and defend whether it shows a real edge. Use the equity curve, trade log, and at least one robustness check.


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## Contents

Part of [📊 Quantitative Trading for Beginners: Build and Backtest a Strategy](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy.md)

- **📈 Market Data and Return Statistics**
  - [🧭 What a Quant Strategy Actually Needs](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy/what-a-quant-strategy-needs.md)
  - [🗂️ Getting and Cleaning Price Data](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy/getting-and-cleaning-price-data.md) (sign-in required)
  - [📉 Returns, Volatility, and Time Series Basics](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy/returns-volatility-and-time-series-basics.md)
  - [✅ Checkpoint: Market Data and Statistics](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy/checkpoint-market-data-and-statistics.md)
- **🧪 Strategy Design and Backtesting**
  - [📝 From Idea to Testable Trading Rules](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy/from-idea-to-testable-trading-rules.md)
  - [🧮 Building the Backtest: Fills, Slippage, and Fees](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy/building-backtest-fills-slippage-and-fees.md)
  - [🔍 Reading Results and Avoiding Overfitting](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy/reading-results-and-avoiding-overfitting.md)
  - [✅ Checkpoint: Strategy Design and Backtesting](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy/checkpoint-strategy-design-and-backtesting.md) — this lesson
- **🛡️ Risk Control and Capstone Build**
  - [⚖️ Position Sizing and Core Risk Metrics](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy/position-sizing-and-core-risk-metrics.md)
  - [🏗️ Capstone: Build and Backtest Your Own Strategy](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy/capstone-build-and-backtest-your-strategy.md) (premium content)
  - [✅ Checkpoint: Risk and Capstone](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy/checkpoint-risk-and-capstone.md) (premium content)
- [Course cheatsheet](https://everwise.study/courses/quantitative-trading-for-beginners-build-and-backtest-a-strategy/cheatsheet.md) (premium content)