152.57.133.55 at 11:17, 8 January 2026

2026-01-08T11:17:18Z

← Older revision		Revision as of 11:17, 8 January 2026
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	== Trading Market Principle ==		== Trading Market Principle ==

	'''"Let winners run, cut losers short. Protect profits once ~~you~~ have them."'''		'''"Let winners run, cut losers short. Protect profits once we have them."'''

	* Breakeven stop = protect capital once trade is working → move stop to entry at 25pt profit		* Breakeven stop = protect capital once trade is working → move stop to entry at 25pt profit

Plusev.blr at 20:37, 7 January 2026

2026-01-07T20:37:58Z

← Older revision		Revision as of 20:37, 7 January 2026
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	== Purpose ==		== Purpose ==

	'''"How do we execute & manage trade to protect capital?"'''		'''"How do we execute & manage trade to protect capital & maximize profit?"'''

	This component is the executor. It takes signals from Layer 4 and:		This component is the executor. It takes signals from Layer 4 and:

Plusev.blr at 20:37, 7 January 2026

2026-01-07T20:37:16Z

← Older revision		Revision as of 20:37, 7 January 2026
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	== Purpose ==		== Purpose ==

	'''"How do we execute ~~and~~ manage ~~the~~ trade to ~~maximize profit~~?"'''		'''"How do we execute & manage trade to protect capital?"'''

	This component is the executor. It takes signals from Layer 4 and:		This component is the executor. It takes signals from Layer 4 and:

Plusev.blr at 20:36, 7 January 2026

2026-01-07T20:36:42Z

← Older revision		Revision as of 20:36, 7 January 2026
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	== Purpose ==		== Purpose ==

	~~Answers the question:~~ '''"How do we execute and manage the trade to maximize profit?"'''		'''"How do we execute and manage the trade to maximize profit?"'''

	This component is the executor. It takes signals from Layer 4 and:		This component is the executor. It takes signals from Layer 4 and:

Plusev.blr at 20:36, 7 January 2026

2026-01-07T20:36:29Z

← Older revision		Revision as of 20:36, 7 January 2026
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	= ~~Component:~~ Trade Execution Engine =		= Trade Execution Engine =

	~~'''File:''' <code>trade_execution_engine.py</code><br/>~~
	~~'''Layer:''' 5 (Final)<br/>~~
	~~'''Lines:''' 822<br/>~~
	~~'''Code:''' [https://github.com/stoic97/plus_ev_code_base/blob/rikk_mtf_backtest001/services/backtest/src/components/trade_execution_engine.py View Source]~~

	~~----~~

	== Purpose ==		== Purpose ==

Plusev.blr: Created page with "= Component: Trade Execution Engine = '''File:''' `trade_execution_engine.py`
'''Layer:''' 5 (Final)
'''Lines:''' 822
'''Code:''' [https://github.com/stoic97/plus_ev_code_base/blob/rikk_mtf_backtest001/services/backtest/src/components/trade_execution_engine.py View Source] ---- == Purpose == Answers the question: '''"How do we execute and manage the trade to maximize profit?"''' This component is the executor. It takes signals from Layer 4..."

2026-01-07T20:36:15Z

Created page with "= Component: Trade Execution Engine = '''File:''' <code>trade_execution_engine.py</code> '''Layer:''' 5 (Final) '''Lines:''' 822 '''Code:''' [https://github.com/stoic97/plus_ev_code_base/blob/rikk_mtf_backtest001/services/backtest/src/components/trade_execution_engine.py View Source] ---- == Purpose == Answers the question: '''"How do we execute and manage the trade to maximize profit?"''' This component is the executor. It takes signals from Layer 4..."

New page

= Component: Trade Execution Engine =

'''File:''' <code>trade_execution_engine.py</code> 
'''Layer:''' 5 (Final) 
'''Lines:''' 822 
'''Code:''' [https://github.com/stoic97/plus_ev_code_base/blob/rikk_mtf_backtest001/services/backtest/src/components/trade_execution_engine.py View Source]

----

== Purpose ==

Answers the question: '''"How do we execute and manage the trade to maximize profit?"'''

This component is the executor. It takes signals from Layer 4 and:
# Converts signals to trades with realistic slippage
# Monitors open positions (stop, target, time)
# Manages stops dynamically (breakeven, trailing)
# Calculates complete P&L with all costs

----

== Trading Market Principle ==

'''"Let winners run, cut losers short. Protect profits once you have them."'''

* Breakeven stop = protect capital once trade is working → move stop to entry at 25pt profit
* Trailing stop = let winners run → trail stop behind price using ATR
* Time exit = don't hold losing trades forever → 8 hour maximum
* Slippage modeling = realistic execution → winners don't fill perfectly either

----

== Trade Lifecycle ==

<pre>
┌───────────────────────────────────────┐
│ Signal from Layer 4 │
│ (Direction, Entry, Stop, Target) │
└───────────────────────────────────────┘
│
▼
┌───────────────────────────────────────┐
│ ENTRY EXECUTION │
│ • Add entry slippage (1-2 pts) │
│ • Calculate costs (commission + CTT) │
│ • Create Trade object │
└───────────────────────────────────────┘
│
▼
┌───────────────────────────────────────┐
│ POSITION MANAGEMENT (per bar) │
│ │
│ 1. Update MFE/MAE tracking │
│ 2. Check breakeven activation (25pt) │
│ 3. Update trailing stop (ATR-based) │
│ 4. Check stop hit │
│ 5. Check target hit │
│ 6. Check time exit (8 hours) │
└───────────────────────────────────────┘
│
▼
┌───────────────────────────────────────┐
│ EXIT EXECUTION │
│ • Add exit slippage (stop=2pt, TP=0.5pt)│
│ • Calculate final P&L │
│ • Record exit reason │
└───────────────────────────────────────┘
</pre>

----

== Two-Phase Stop Management ==

=== Phase 1: Breakeven Stop ===

Once trade is profitable by 25 points, move stop to entry price + buffer:

<pre>
IF current_profit >= 25 points:

LONG: stop = entry_price + 2 (buffer)
SHORT: stop = entry_price - 2 (buffer)
</pre>

'''Purpose:''' Lock in a no-loss trade (or small profit with buffer).

=== Phase 2: Trailing Stop ===

After profit exceeds activation threshold, trail stop behind price:

<pre>
Trailing Distance = ATR × 2.0 (minimum 15 points)

LONG:
IF profit >= 20 points:
new_stop = current_high - trailing_distance
IF new_stop > current_stop:
current_stop = new_stop // Only moves UP

SHORT:
IF profit >= 20 points:
new_stop = current_low + trailing_distance
IF new_stop < current_stop:
current_stop = new_stop // Only moves DOWN
</pre>

'''Purpose:''' Let winners run while protecting accumulated profit.

----

== ATR Calculation ==

ATR (Average True Range) measures volatility for adaptive trailing:

<pre>
True Range = max(
high - low,
|high - previous_close|,
|low - previous_close|
)

ATR = average(True Range over 14 bars)

Trailing Distance = ATR × 2.0
</pre>

'''Effect:'''
* High volatility → wider trailing stop (more room to breathe)
* Low volatility → tighter trailing stop (protect more profit)

----

== Slippage Model ==

Realistic slippage based on market conditions:

=== Entry Slippage ===

<pre>
entry_slippage = base (1.0 pt)
+ position_impact (0.1 × lots, capped at 2.0)
+ volatility (0.5 pt)

Minimum: 0.5 points
</pre>

=== Exit Slippage ===

{| class="wikitable"
|-
! Exit Type !! Slippage !! Reason
|-
| Stop Loss || 2.0 points || Panic selling, worse fills
|-
| Take Profit || 0.5 points || Limit order, better fills
|-
| Time Exit || 0.0 points || Market order at close
|}

----

== MFE/MAE Tracking ==

Tracks Maximum Favorable and Adverse Excursion for each trade:

{| class="wikitable"
|-
! Metric !! What It Measures !! Usage
|-
| '''MFE''' || Best profit point reached during trade || Entry timing quality
|-
| '''MAE''' || Worst loss point during trade || Stop placement optimization
|}

<pre>
LONG:
MFE = max profit seen = (highest_high - entry) × 100 × lots
MAE = max loss seen = (lowest_low - entry) × 100 × lots

SHORT:
MFE = max profit seen = (entry - lowest_low) × 100 × lots
MAE = max loss seen = (entry - highest_high) × 100 × lots
</pre>

----

== Exit Conditions ==

Trades exit when any condition is met (checked in order):

{| class="wikitable"
|-
! Priority !! Condition !! Exit Price !! Reason Code
|-
| 1 || Stop hit || stop_price - slippage (LONG) || "stop"
|-
| 2 || Target hit || target_price - slippage (LONG) || "target"
|-
| 3 || Time limit (8 hours) || current_close || "timeout"
|}

----

== Configuration ==

{| class="wikitable"
|-
! Parameter !! Value !! Description
|-
| <code>base_slippage_points</code> || 1.0 || Base entry slippage
|-
| <code>market_impact_factor</code> || 0.1 || Slippage per lot
|-
| <code>max_market_impact_slippage</code> || 2.0 || Cap on position slippage
|-
| <code>stop_loss_slippage</code> || 2.0 || Additional slippage on stops
|-
| <code>take_profit_slippage</code> || 0.5 || Reduced slippage on targets
|-
| <code>max_holding_period_minutes</code> || 480 || 8 hours max holding
|-
| <code>enable_trailing_stop</code> || True || Enable trailing stop
|-
| <code>trailing_stop_method</code> || "ATR_MULTIPLE" || ATR-based or fixed
|-
| <code>atr_period</code> || 14 || ATR lookback period
|-
| <code>atr_multiplier</code> || 2.0 || Trailing = ATR × 2
|-
| <code>enable_breakeven_stop</code> || True || Enable breakeven
|-
| <code>breakeven_activation</code> || 25.0 || Points profit to activate
|-
| <code>breakeven_buffer</code> || 2.0 || Buffer above/below entry
|-
| <code>max_concurrent_trades</code> || 3 || Maximum open positions
|}

----

== Output ==

'''Trade Object (after exit):'''
{| class="wikitable"
|-
! Field !! Type !! Description
|-
| <code>entry_price</code> || float || Actual entry (with slippage)
|-
| <code>exit_price</code> || float || Actual exit (with slippage)
|-
| <code>exit_reason</code> || str || "stop", "target", "timeout"
|-
| <code>gross_pnl_inr</code> || float || P&L before costs
|-
| <code>net_pnl_inr</code> || float || P&L after commission + CTT
|-
| <code>brokerage_cost</code> || float || Commission paid
|-
| <code>tax_cost</code> || float || CTT paid
|-
| <code>max_favorable_excursion_inr</code> || float || Best P&L during trade
|-
| <code>max_adverse_excursion_inr</code> || float || Worst P&L during trade
|-
| <code>current_stop_price</code> || float || Final stop (after trailing)
|}

----

== Dependencies ==

'''Upstream:'''
* [[Component:Signal_Generation|signal_generation_trade_management.py]] - Provides signals to execute

'''Uses:'''
* SignalGenerationTradeManagement.execute_signal() - For entry
* SignalGenerationTradeManagement.close_trade() - For exit

----

== Quick Reference ==

{| class="wikitable"
|-
! Event !! Action
|-
| New signal received || Execute with slippage, create trade
|-
| Profit reaches 25pt || Move stop to breakeven (entry + 2pt)
|-
| Profit reaches 20pt || Start trailing stop (ATR × 2)
|-
| Price hits stop || Exit with 2pt slippage, reason="stop"
|-
| Price hits target || Exit with 0.5pt slippage, reason="target"
|-
| 8 hours elapsed || Exit at market, reason="timeout"
|-
| Higher high (LONG) || Trail stop up if trailing active
|-
| Lower low (SHORT) || Trail stop down if trailing active
|}

----

[[Category:Components]]
[[Category:Layer 5]]

Component:Trade Execution - Revision history

152.57.133.55 at 11:17, 8 January 2026

Plusev.blr at 20:37, 7 January 2026

Plusev.blr at 20:37, 7 January 2026

Plusev.blr at 20:36, 7 January 2026

Plusev.blr at 20:36, 7 January 2026