risk-mgmt

Your first Stress Test (5-scenario survival checklist)

Run the same strategy through 5 real historical periods before deploying

25 min · beginner

What you'll have when finished

  • Know whether your strategy would have survived COVID, LUNA, FTX, 3AC, and 2023 chop
  • Have a documented stress-test record per strategy
  • Catch over-fit strategies BEFORE they meet live capital

Before you start

  • A strategy that wins one scenario but loses three is not stress-tested — keep all 5 results
  • Past survival does NOT guarantee future survival, but failing the test almost guarantees future failure
  • Do NOT skip the chop scenario (Q3 2023) — most over-fit trend strategies look great until they meet sideways markets

Walkthrough

  1. Save a strategy first

    Open Strategy Builder and either pick a Template or build your own. Save it with a memorable name like "ETH RSI swing v1". You CANNOT meaningfully stress-test a strategy you haven't saved — the dropdown falls back to a generic baseline.

    Success criteria: Your strategy appears in the My Strategies tab with a strategyId

  2. Open Stress Test and pick "COVID-19 Black Thursday"

    CEX Trade → Stress Test. The scenario list is on the left. Click COVID-19 Black Thursday (Mar 2020) — CRITICAL severity, expected drawdown -50%. The right panel populates with run config.

    Success criteria: You see the scenario card title "COVID-19 Black Thursday (Mar 2020)" with date range 2020-02-15 → 2020-03-31

  3. Configure + run

    Strategy = the one you saved. Exchange = your connected one. Pair = BTC/USDT (scenario default). Capital = 10000. Fee BPS = 40. Click Run. First run fetches the candles (5-30 sec); subsequent runs hit cache. Result card shows your strategy's drawdown vs the market's -50%.

    Success criteria: Result card appears showing equity curve, final equity, max drawdown, Sharpe

  4. Write down the result

    Open a notepad. Note: scenario name, your drawdown %, market drawdown %, did you finish green or red. This is your audit trail. Without it, after 5 runs you will not remember which one passed and which failed.

    Success criteria: You have one row of notes: "COVID 2020 — strategy DD: X% — market DD: -50% — final: green/red"

  5. Repeat for LUNA Collapse (May 2022)

    Pick LUNA / Terra USD Collapse. Same strategy, same exchange, same pair. Run + record. This is CRITICAL severity, -60% expected drawdown — the contagion event.

    Success criteria: Second row of notes recorded

  6. Repeat for FTX Collapse (Nov 2022) and 3AC Cascade (Jun 2022)

    Two more CRITICAL scenarios that test secondary-shock survival. Different month, different shape of crash. Your strategy may handle ONE of them well but not the other — that is useful information.

    Success criteria: Four rows of notes recorded

  7. Run the chop test (Q3 2023 Sideways Chop)

    MEDIUM severity, -8% expected. This is the silent killer for trend-following strategies — markets ranged for 3 months and every entry got whipsawed. If your strategy loses MORE than -8% here despite the market only ranging, the rules are too eager.

    Success criteria: Fifth row recorded — pay special attention to win rate, not just final equity

What's next

You have a 5-scenario verdict on your strategy. A passing grade: drawdown lower than market drawdown in CRITICAL scenarios, AND positive return in the chop test. If 4 of 5 pass, the failing one tells you what to fix. If 0 of 5 pass, rebuild the strategy — do not deploy it.