Coin-Flip Trading as a Weekly Backtest Baseline

Summary

This experimental strategy uses a random coin-flip result to choose a long or short position on a selected weekday. It sets take-profit and stop levels at one ATR from the entry reference, giving a nominal one-to-one reward-to-risk distance, and describes holding through the week. The listed settings include an ATR period of 20, a test year of 2022, and Monday as the selected day.

The stated purpose is to provide a simple baseline for comparison with systematic strategies. The document suggests repeating tests over long histories to examine the average behavior of random entries, but supplies no performance results. There is also a discrepancy between the prose, which says positions close at week's end, and the code, which shows ATR-based exits but no explicit end-of-week close. Random entries do not encode a market signal, and outcomes will depend on execution assumptions, sampling, and the chosen exit rules; the document cautions against treating it as a live strategy.

Key ideas

• A random result selects a long or short trade on a chosen weekday.
• The stated stop and target distances are each one ATR from the entry reference.
• The strategy is intended as a benchmark for comparing random entries with other methods.
• The prose says to close at week's end, but the supplied code does not show that exit rule.
• No performance results are given, and random signals do not exploit market information.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.