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System specification
A machine-readable definition of components, contracts, limits, identities, environments, and operating procedures.
Lesson · Algorithmic and Automated Trading
Automated Trading System Specification and Production Readiness
Combine strategy, data, architecture, risk, broker, reliability, security, deployment, observability, approval, and rollback requirements into one versioned production specification.
Core concepts
What to understand
Keep the boundaries, state, and authority explicit.
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Readiness gate
Objective criteria for data, strategy, risk, paper evidence, reliability, security, monitoring, and recovery.
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Operating plan
Ownership, alerts, incident response, reconciliation, kill switch, rollback, and post-trade review.
Interactive lab
Automated Trading System Specification Builder
Configure the complete system, resolve readiness warnings, preview the architecture, and export a JSON specification.
Automated Trading System Specification Builder
Deterministic synthetic educational data · no broker or live-market connection
SYSTEM MODEL
Process
Approve the whole system
A profitable backtest is only one input to production readiness.
Specify
Version every rule, interface, limit, environment, and owner.
Verify
Test replay, paper, failure, security, monitoring, and recovery scenarios.
Operate
Start with bounded exposure and continuously reconcile, observe, and review.
Knowledge check
Check your understanding
Select one answer for each question. Feedback appears immediately, and a wrong choice is answered on its own terms before the rule is restated.
1. Which item is required before automatic execution?
Execution authority must be bounded and stoppable.
2. Production readiness should be decided by:
Data, execution, risk, operations, security, and recovery all matter.
3. The live rollout should begin with:
A bounded rollout limits the effect of unknown production behavior.
4. Ten readiness checks, nine met — the one not met is independent risk — and automation set to automatic. What is the readiness verdict, and does the export proceed?
9 of 10 → Not ready. Automatic execution with risk bypassed is the contradiction the hero forbids, so the export is blocked and says which control is missing.
Practical rules
- Require explicit readiness criteria and owners.
- Start live operation with limited symbols, size, and automation.
- Review broker reconciliation, incidents, and control effectiveness continuously.
Common mistakes
- Treating backtest approval as production approval.
- Enabling live execution without a tested kill switch.
- Leaving operational ownership undefined.
References
Official reading
These sources cover algorithmic controls, market access, broker APIs, system operations, or security.
FINRA · Regulatory Notice 15-09
Official guidance on supervision, testing, controls, documentation, and monitoring for algorithmic trading strategies.
SEC · Rule 15c3-5 Market Access Controls
Official rule overview describing pre-trade financial and regulatory risk controls for broker-dealers with market access.
OpenTelemetry · Signals
Official overview of traces, metrics, and logs used to observe distributed systems.