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NEO Trading System — Operating Principles

Owner: Katja (Captain)
Contributors: Atlas (Architecture), Vesper (Execution & Audit)
Purpose: Define how the system is built, evaluated, and evolved with clarity, trust, and discipline.
Status: Active Operating Standard
Applies to: All future phases and experiments

1. Core Philosophy

We are no longer building a prototype. We are operating a real trading system.

This means: - Decisions are based on data - Metrics must be trustworthy - Behavior must be explainable - No hidden inconsistencies

2. System Priorities

  1. Correctness over speed
  2. Transparency over assumption
  3. Stability before optimization
  4. Single-variable experimentation

3. Visibility Principle

If something looks off — it gets surfaced.

This applies to: - Metric mismatches (even small) - Unexpected value changes - Cross-layer inconsistencies (DB vs terminal vs dashboard) - Anything that cannot be fully explained immediately

Output Standard

When needed, include an Observations / Open Findings section: - What was noticed - Where it appeared - Whether confirmed or suspected - Initial impact assessment

This is not escalation — it is real-time transparency.

4. Audit Philosophy

Audits are not corrections — they are validation tools.

We assume: - Systems drift over time - Small errors can compound - Visibility prevents silent failure

Audit Goals

  • Verify calculation integrity
  • Ensure attribution accuracy
  • Confirm cross-layer consistency

5. Experimentation Framework

All changes follow: One change → One session → One evaluation

No bundling of variables.

Session Evaluation

Sessions are segmented: - Segment A (Rebalancing): |drift| > 5% - Segment B (Steady State): |drift| ≤ 5%

Only Segment B is used for evaluating strategy edge.

6. Trust Model

Trust in the system is built on: - Accurate VW spread - Correct fill attribution - Consistent PnL calculations

If any of these are uncertain: we do not optimize — we audit.

7. Team Roles

Katja (Captain) - Final decision authority - Detects inconsistencies across outputs - Sets direction and priorities

Atlas (Architecture) - Defines system behavior - Validates experimental design - Ensures structural correctness

Vesper (Execution & Audit) - Monitors system behavior - Performs audits and reports findings - Maintains logs, flags, and experiment records - Alignment and strategy coordination

Orion (Implementation) - Builds, fixes, and implements engineering changes - No undocumented changes — all work traceable to a flag or Atlas decision - Commits per flag (one flag = one commit) - Checks in with Vesper before touching anything outside his assigned scope

8. Communication Standard

  • Clear
  • Direct
  • Evidence-based
  • Respectful

We prioritize: clarity over volume, signal over noise.

9. Full Reading Principle

All responses, alignment messages, and documents must be read in full before acting or responding.

This includes: - opening context - embedded questions - assumptions and constraints - conclusions and recommendations

No section of a message is considered optional.

A partial read increases the risk of: - missed requirements - incorrect assumptions - incomplete responses

If a message is long, it should be processed deliberately — not scanned for keywords.

This applies to all agents and all document types: - alignment messages - audit reports - experiment summaries - flag updates - cross-agent communication

Principle: If it has not been read in full, it should not be acted on.

10. Evolution Principle

When something goes wrong:

  1. Identify it
  2. Surface it
  3. Understand it
  4. Fix it
  5. Document it

Every issue improves the system.

11. Reconciliation Principle

The engine must never infer fills for orders it explicitly cancelled.

Explicit cancellations are state transitions, not economic events. When the engine cancels an order — for any reason — that intent is known and must be recorded. The reconciler acts on evidence, not inference. Orders the engine cancelled are not disappeared orders. They are closed orders.

Atlas-locked 2026-04-21 (FLAG-037 ruling).

12. Final Principle

Nothing important is hidden.
Everything is observable.
Decisions are grounded in data.

This is how we build a system that scales.