> ## Documentation Index
> Fetch the complete documentation index at: https://docs.itoflow.ai/llms.txt
> Use this file to discover all available pages before exploring further.

# Build and stress-test a strategy idea

> Describe a strategy and its risk targets, and Itoflow's research agent compares designs walk-forward with trading costs, holds back an out-of-sample period, stress-tests them on crashes such as Covid, and drafts the winner as a paused paper strategy for you to review.

Describe a strategy and the risk you'll accept. The research agent designs a few candidates, tests them walk-forward with costs, keeps recent years out of sample, and stress-tests them on a crash. If one meets your targets, it drafts it as a paper strategy that starts paused.

**What you'll get:** a comparison of the candidate designs with returns, volatility and drawdowns in and out of sample, a stress test, the code, and a draft strategy you can turn on.

## Try it

> [tab] Ask your AI assistant
>
> With [Itoflow connected to your assistant](https://docs.itoflow.ai/mcp/install.md), paste this into your assistant:
>
> ```text theme={null}
> Use Itoflow to build a US stock and bond strategy that targets 10% annual
> volatility and a maximum drawdown of 15%. Compare at least three designs,
> including a static 60/40 mix. Test each one walk-forward with trading costs,
> keep the years from 2019 out of sample, and stress-test each on the Covid
> crash of 2020. Ask me before you assume anything I haven't said. Show me the
> evidence for the design you pick. If it meets both targets, draft it as a
> paper strategy with $100,000, show it to me, and create it paused only when I
> agree. Wait for the research to finish.
> ```
>
> > [card] [Open in Claude](https://claude.ai/new?q=Use%20the%20Itoflow%20plugin%20\(https%3A%2F%2Fgithub.com%2Fitoflow%2Fskills\)%20for%20this.%20If%20it%20isn't%20installed%20yet%2C%20first%20tell%20me%20how%20to%20install%20it%20and%20sign%20in%20to%20Itoflow%2C%20and%20wait%20until%20I%20confirm.%20Then%3A%0A%0AUse%20Itoflow%20to%20build%20a%20US%20stock%20and%20bond%20strategy%20that%20targets%2010%25%20annual%20volatility%20and%20a%20maximum%20drawdown%20of%2015%25.%20Compare%20at%20least%20three%20designs%2C%20including%20a%20static%2060%2F40%20mix.%20Test%20each%20one%20walk-forward%20with%20trading%20costs%2C%20keep%20the%20years%20from%202019%20out%20of%20sample%2C%20and%20stress-test%20each%20on%20the%20Covid%20crash%20of%202020.%20Ask%20me%20before%20you%20assume%20anything%20I%20haven't%20said.%20Show%20me%20the%20evidence%20for%20the%20design%20you%20pick.%20If%20it%20meets%20both%20targets%2C%20draft%20it%20as%20a%20paper%20strategy%20with%20%24100%2C000%2C%20show%20it%20to%20me%2C%20and%20create%20it%20paused%20only%20when%20I%20agree.%20Wait%20for%20the%20research%20to%20finish.)
> >
> > Start this in Claude with the Itoflow plugin.
>
> > [card] [Open in ChatGPT](https://chatgpt.com/?q=Use%20the%20Itoflow%20plugin%20\(https%3A%2F%2Fgithub.com%2Fitoflow%2Fskills\)%20for%20this.%20If%20it%20isn't%20installed%20yet%2C%20first%20tell%20me%20how%20to%20install%20it%20and%20sign%20in%20to%20Itoflow%2C%20and%20wait%20until%20I%20confirm.%20Then%3A%0A%0AUse%20Itoflow%20to%20build%20a%20US%20stock%20and%20bond%20strategy%20that%20targets%2010%25%20annual%20volatility%20and%20a%20maximum%20drawdown%20of%2015%25.%20Compare%20at%20least%20three%20designs%2C%20including%20a%20static%2060%2F40%20mix.%20Test%20each%20one%20walk-forward%20with%20trading%20costs%2C%20keep%20the%20years%20from%202019%20out%20of%20sample%2C%20and%20stress-test%20each%20on%20the%20Covid%20crash%20of%202020.%20Ask%20me%20before%20you%20assume%20anything%20I%20haven't%20said.%20Show%20me%20the%20evidence%20for%20the%20design%20you%20pick.%20If%20it%20meets%20both%20targets%2C%20draft%20it%20as%20a%20paper%20strategy%20with%20%24100%2C000%2C%20show%20it%20to%20me%2C%20and%20create%20it%20paused%20only%20when%20I%20agree.%20Wait%20for%20the%20research%20to%20finish.)
> >
> > Start this in ChatGPT with the Itoflow plugin.
>
> Using another client? Copy the prompt with the button on the code block.

> [tab] In the Itoflow app
>
> 1. Open [Chat](https://app.itoflow.ai/chat), or start from a template under [New strategy](https://app.itoflow.ai/strategies/new).
> 2. Describe the strategy, its volatility and drawdown targets, the designs to compare, and the crash to test.
> 3. Answer the agent's questions about anything you left open.
> 4. Review the evidence. If you agree, the agent drafts a paused paper strategy, which you open under [Strategies](https://app.itoflow.ai/strategies) and turn on.

## What a result looks like

[Governed agents in practice](https://itoflow.ai/blog/governed-agents-in-practice), July 9, 2026, publishes this session unedited. Asked for a US stock and bond strategy with a 10% volatility target and a 15% maximum drawdown, the agent compared three designs:

| Design | Result |
| - | - |
| Static 60/40 | Worst drawdown about 21% |
| Trend only | Worst drawdown about 19.5% |
| Trend, momentum and volatility targeting | 5.2% a year at 6.9% volatility over the full sample; 3.7% at 7.4% in the holdout from 2019; worst drawdown 13.8% |

In the Covid test, SPY fell about 34% and the 60/40 mix about 20%. The crash falls inside the holdout from 2019, so the holdout figures include it. The session ended in a paused paper strategy. These are backtests and paper results, not live profit and loss.

## How it's checked

* **Targets become checked limits.** The volatility and drawdown targets go into a [research contract](https://docs.itoflow.ai/platform/agent-harness.md#the-research-contract) before any test runs.
* **The holdout stays out.** The system recomputes the out-of-sample choice itself, and the deflated Sharpe ratio and the probability of backtest overfitting are part of the engine.
* **A second agent reviews it.** In the same post, a second session's first draft was sent back by the [independent reviewer](https://docs.itoflow.ai/platform/agent-harness.md#independent-review) and repaired before it passed.
* **Nothing trades until you say so.** The draft starts paused. A live portfolio also waits for you to approve each list of trades.

## Limits

* Backtests use modeled fills and trading costs.
* Bond exposure comes through ETFs. Futures, options and individual bonds aren't covered.
* Long-short books run on paper portfolios only.

## Next steps

* [Run a strategy under a mandate](https://docs.itoflow.ai/use-cases/run-a-strategy.md): turn the draft on, run it and read its decisions.
* [Test a signal or dataset](https://docs.itoflow.ai/use-cases/test-a-signal.md) before you build a strategy on it.
* [Strategies](https://docs.itoflow.ai/features/strategies.md): the full API.


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