DEV Community

Igor Ganapolsky
Igor Ganapolsky

Posted on • Originally published at github.com

AI Trading: Lesson Learned #125: Comprehensive Trust Audit (Jan 9, 2026)

#ai #trading #python #machinelearning

Lesson Learned #125: Comprehensive Trust Audit (Jan 9, 2026)

ID: LL-125
Date: January 9, 2026
Severity: CRITICAL
Category: Trust, Operations, Strategy
Status: Action Required

CEO Questions & Honest Answers

1. Are we following Phil Town Rule #1?

Answer: PARTIALLY IMPLEMENTED, NOT ENFORCED

Evidence:

  • src/strategies/rule_one_options.py - 1,091 lines of Phil Town strategy
  • Big Five, Sticker Price, MOS Price calculations implemented
  • BUT: Stop loss was 200% (effectively no protection)
  • FIXED Jan 9: Now 25-50% stop loss + 15% trailing stop

2. Why are we losing money?

Evidence (from system_state.json):

Win Rate: 80% (4/5 trades)
Average Return: -6.97% (NEGATIVE!)
Enter fullscreen mode Exit fullscreen mode

Root Cause: Classic trading mistake - letting losers run too long

  • Winners: Small gains captured
  • Losers: Ran 200%+ before exit
  • Result: Negative expected value despite high win rate

3. Risk mitigation status?

BEFORE Jan 9: Not enforced

  • No trailing stops
  • 200% stop loss = no protection
  • Positions unprotected

AFTER Jan 9: Configured but untested (paper trading broken)

  • 25% stop loss
  • 15% trailing stop
  • 2% max position risk

4. $100/day goal achievable?

Math Reality:

  • $100/day @ 0.3% daily return requires $33,333+ capital
  • Current: $30 live + $5,000 paper
  • Timeline: 2027+ with perfect execution and compounding

5. Learning from top traders?

Infrastructure exists but NOT actively running:

  • YouTube analyzer: Last run Nov 5, 2025
  • Bogleheads agent: Built but not scheduled
  • Weekend learning workflow: Not executing
  • Vertex AI sync: skipped_no_keys

6. RAG recording status?

NOT WORKING:

  • Sandbox cannot reach Vertex AI (SSL blocked)
  • CI workflows not running
  • Local JSON backup: Working but stale

Critical Finding: Paper Trading Dead 4 Days 

❌ 2026-01-09 (Friday): NO TRADES
❌ 2026-01-08 (Thursday): NO TRADES
❌ 2026-01-07 (Wednesday): NO TRADES
✅ 2026-01-06 (Tuesday): 3 trades ← ONLY successful day
❌ 2026-01-05 (Monday): NO TRADES
Enter fullscreen mode Exit fullscreen mode

System is in zombie mode - appears working but not executing.

Most Important Action

FIX PAPER TRADING WORKFLOW IMMEDIATELY

Without a working trading system, nothing else matters:

  • Cannot test Phil Town strategy
  • Cannot validate risk rules
  • Cannot generate data for RAG
  • Cannot prove compounding works

CEO Action Required

  1. Check GitHub Secrets exist: ALPACA_PAPER_TRADING_5K_API_KEY
  2. Check GitHub Actions for Jan 7-9 workflow runs
  3. Manually trigger daily-trading.yml workflow
  4. Monitor for successful trade execution

CTO Commitments

  1. Never claim "fixed" without end-to-end verification
  2. Check trading activity daily (not just configs)
  3. Report stale data with disclosure
  4. Implement health monitoring for trading gaps

Tags

trust-audit, phil-town, rule-1, paper-trading, critical, honest-assessment

This lesson was auto-published from our AI Trading repository.

More lessons: rag_knowledge/lessons_learned

Top comments (0)