Hierarchical trade policies for entries, exits, and protective orders

A single monolithic trading policy is tempting because it looks simple. In practice, entry timing, position sizing, protective order placement, and exit management answer different questions under different constraints. Hierarchical trade design lets each layer specialize while still sharing state.

At the top level, the strategy decides whether the current regime deserves risk. A middle layer converts that permission into direction and size. Lower layers place take-profit, stop-loss, and trailing controls based on volatility, liquidity, and expected holding time.

This separation makes review easier. When performance changes, researchers can identify whether the issue is signal quality, sizing aggressiveness, or execution management. It also makes live safeguards clearer: a risk layer can veto a trade without rewriting the entry model.

The hierarchy does not remove complexity. It makes complexity inspectable, which is the main advantage when a research system becomes a live trading system.