Chapter 9: Deployment and Safety¶

Build robust, safe trading systems.

Safety Philosophy¶

"Plan for failure" - every component can fail:

Data sources become unavailable
Broker connections drop
Strategies behave unexpectedly
Markets move violently

Build systems that fail safely.

Defense in Depth¶

Multiple Layers of Protection¶

Text Only

Layer 1: Pre-Trade Checks
    ↓
Layer 2: Position Limits
    ↓
Layer 3: Exposure Controls
    ↓
Layer 4: Loss Limits
    ↓
Layer 5: Circuit Breakers
    ↓
Layer 6: Kill Switch

Pre-Trade Checks¶

Order Validation¶

YAML

safety:
  pre_trade_checks:
    enabled: true

    checks:
      # Price reasonableness
      - name: "Price Check"
        condition: abs(order_price - last_price) / last_price < 0.05
        message: "Order price >5% from last price"

      # Size limits
      - name: "Size Check"
        condition: order_value < max_order_value
        message: "Order exceeds maximum size"

      # No penny stocks
      - name: "Price Floor"
        condition: price > 1.0
        message: "Stock price below $1"

      # Liquidity check
      - name: "Liquidity"
        condition: order_size < avg_daily_volume * 0.01
        message: "Order exceeds 1% of ADV"

What Gets Checked¶

Check	Purpose	Example
Price	No fat fingers	Order within 5% of market
Size	Limit impact	<1% of ADV
Exposure	Risk limit	Position <3%
Liquidity	Executability	Stock has volume
Restriction	Compliance	Not on restricted list

Position Limits¶

Static Limits¶

YAML

risk:
  limits:
    # Per-position
    max_position: 0.03          # 3% max per stock
    max_position_value: 50000   # $50K max

    # Sector
    max_sector: 0.20            # 20% per sector

    # Total
    max_positions: 200          # Max 200 positions

Dynamic Limits¶

YAML

risk:
  dynamic_limits:
    # Scale down after losses
    - condition: mtd_return < -0.05
      action:
        max_position: 0.02      # Reduce to 2%

    # Scale down in high vol
    - condition: vix > 30
      action:
        gross_exposure: 1.5     # Reduce exposure

Loss Limits¶

Daily Loss Limit¶

YAML

safety:
  loss_limits:
    daily:
      warning: 0.02    # 2% - send alert
      hard: 0.03       # 3% - halt trading

Drawdown Limits¶

YAML

safety:
  loss_limits:
    drawdown:
      warning: 0.10    # 10% - send alert
      hard: 0.15       # 15% - halt trading

Actions on Breach¶

YAML

safety:
  loss_limits:
    daily:
      hard: 0.03
      action:
        - halt_new_trades
        - flatten_positions     # Optional
        - notify_admin

Circuit Breakers¶

Automatic Halts¶

YAML

safety:
  circuit_breakers:
    # Daily loss
    - name: "Daily Loss"
      condition: daily_pnl < -0.03
      action: halt_trading
      reset: next_trading_day

    # Position divergence
    - name: "Position Divergence"
      condition: max_position_divergence > 0.10
      action: halt_trading
      reset: manual

    # System error
    - name: "Error Count"
      condition: error_count_1h > 10
      action: halt_trading
      reset: manual

Market-Wide Halts¶

Respect exchange circuit breakers:

YAML

safety:
  market_circuit_breakers:
    enabled: true
    # Pause when market halts
    resume_delay: 300  # Wait 5 min after resume

Kill Switch¶

Emergency Stop¶

Bash

# Immediate halt - no new trades
sigc kill

# Flatten all positions
sigc kill --flatten

Remote Kill Switch¶

YAML

safety:
  kill_switch:
    enabled: true

    # Multiple triggers
    triggers:
      - type: slack_command
        command: "/kill trading"

      - type: api
        endpoint: "/api/kill"
        auth: api_key

      - type: watchdog
        timeout: 300  # No heartbeat for 5 min

Data Validation¶

Input Validation¶

YAML

data:
  validation:
    # Freshness
    max_age: 2h
    stale_action: alert

    # Completeness
    min_assets: 100
    missing_action: warn

    # Sanity
    price_change_limit: 0.50  # 50% daily change suspicious
    price_check_action: exclude

Anomaly Detection¶

YAML

data:
  anomaly_detection:
    enabled: true

    checks:
      # Unusual price moves
      - type: price_change
        threshold: 3  # Standard deviations
        action: flag

      # Volume spikes
      - type: volume_spike
        threshold: 10x
        action: flag

      # Missing data
      - type: gaps
        max_gap: 5  # Trading days
        action: alert

Execution Safety¶

Order Types¶

YAML

execution:
  order_settings:
    # Use limit orders
    default_type: limit
    limit_offset_bps: 5

    # Timeout for unfilled orders
    timeout_seconds: 30
    timeout_action: cancel

    # Max retries
    max_retries: 3

Slippage Protection¶

YAML

execution:
  slippage_protection:
    max_slippage_bps: 20
    action_on_breach: cancel

Trade Reconciliation¶

YAML

execution:
  reconciliation:
    frequency: hourly
    tolerance: 0.01  # 1% position difference

    on_mismatch:
      - alert
      - log_discrepancy
      - auto_correct  # Optional

Monitoring & Alerting¶

Health Checks¶

YAML

monitoring:
  health_checks:
    - name: "Daemon Running"
      check: process_alive
      interval: 60s

    - name: "Broker Connected"
      check: broker_ping
      interval: 30s

    - name: "Data Fresh"
      check: data_age < 2h
      interval: 300s

    - name: "Positions Match"
      check: position_reconciliation
      interval: 3600s

Alert Escalation¶

YAML

alerting:
  escalation:
    warning:
      - channel: slack
        target: "#trading-alerts"

    critical:
      - channel: slack
        target: "#trading-alerts"
      - channel: pagerduty
        target: "trading-oncall"
      - channel: sms
        target: "+1234567890"

Logging & Audit¶

What to Log¶

YAML

logging:
  events:
    # All trades
    - type: trade
      level: info
      retain: 7y

    # Signals
    - type: signal_computation
      level: debug
      retain: 30d

    # Errors
    - type: error
      level: error
      retain: 7y

    # Configuration changes
    - type: config_change
      level: info
      retain: 7y

Audit Trail¶

YAML

audit:
  enabled: true

  capture:
    - all_orders
    - position_changes
    - config_changes
    - user_actions

  storage:
    type: immutable
    retention: 7y

Disaster Recovery¶

Backup Procedures¶

YAML

backup:
  # State backup
  state:
    frequency: daily
    destination: s3://backups/state/
    retain: 90d

  # Configuration
  config:
    frequency: on_change
    destination: git
    retain: forever

  # Logs
  logs:
    frequency: daily
    destination: s3://backups/logs/
    retain: 7y

Recovery Procedures¶

System Failure

Bash

# Restart daemon
sigc daemon restart

# Verify positions
sigc reconcile

# Resume trading
sigc daemon resume

Data Corruption

Bash

# Restore from backup
sigc restore --state latest

# Verify state
sigc status --verify

Broker Issues

Bash

# Switch to backup broker
sigc broker switch --to backup

Complete Safety Configuration¶

YAML

# config/safety.yaml

safety:
  # Pre-trade
  pre_trade_checks:
    enabled: true
    checks:
      - price_reasonableness
      - size_limit
      - liquidity
      - restricted_list

  # Limits
  limits:
    max_position: 0.03
    max_sector: 0.20
    gross_exposure: 2.0
    net_exposure: [-0.1, 0.1]

  # Loss limits
  loss_limits:
    daily:
      warning: 0.02
      hard: 0.03
    drawdown:
      warning: 0.10
      hard: 0.15

  # Circuit breakers
  circuit_breakers:
    - name: daily_loss
      trigger: daily_pnl < -0.03
      action: halt

    - name: position_divergence
      trigger: max_divergence > 0.10
      action: halt

  # Kill switch
  kill_switch:
    enabled: true
    methods: [api, slack, watchdog]

# Monitoring
monitoring:
  health_checks:
    interval: 60s
    checks: [daemon, broker, data, positions]

  prometheus:
    enabled: true
    port: 9090

# Alerting
alerting:
  channels:
    - type: slack
      webhook: ${SLACK_WEBHOOK}
    - type: pagerduty
      key: ${PAGERDUTY_KEY}

  rules:
    - condition: daily_loss > 0.02
      severity: warning
    - condition: daily_loss > 0.03
      severity: critical
    - condition: system_error
      severity: critical

# Logging
logging:
  level: info
  output: /var/log/sigc/
  retention: 7y

# Audit
audit:
  enabled: true
  events: [trades, positions, config]
  storage: immutable

Best Practices Checklist¶

Before Going Live¶

Ongoing¶

Daily system health review
Weekly safety drills
Monthly backup verification
Quarterly disaster recovery test

Summary¶

You've completed the Quantitative Trading Guide. You now know how to:

Understand quantitative trading fundamentals
Build trading signals from data
Backtest strategies properly
Manage portfolio risk
Deploy to production
Monitor live trading
Keep systems safe

Good luck on your trading journey.

Additional Resources¶

Tutorials - Hands-on guides
Strategy Library - Example strategies
API Reference - Programmatic access
Production Guide - Detailed production docs