Building strategies

This section teaches how to build a good algorithm on Parachute. Where the Strategy reference documents each surface in the Strategy tab — which button does what — this track is about the ideas behind a strategy: what an edge is, how the pieces fit together, how to read a backtest honestly, and which kinds of strategy are worth building.

Parachute is software you run on your own Kalshi account. You build the algorithm; your bot executes it against your own funds and credentials. Parachute never takes custody of your money and never trades on its own behalf. Nothing in these pages is financial advice or a prediction of results — building and running a strategy is your decision, and every strategy can lose money. See Money safety.

The mental model

A strategy is a small, ordered pipeline in three stages:

1. Model — price each candidate contract and measure the edge (how the model's fair value compares to the market price).
2. Entry rules — a chain of filters that decide whether a candidate is actually worth trading, plus how big to size it.
3. Exit rules — how and when a position is closed or hedged.

You compose that pipeline on the Tune canvas, test it with a backtest, and publish it through the evidence gate. Everything in this track maps back to those same stages and the shared component vocabulary the whole product speaks.

In this section

| Page | What it covers | |---|---| | Concepts: edge & settlement | Edge and expected value on yes/no contracts, how crypto contracts settle, and why an edge fades as more capital chases it | | Component vocabulary | The three-stage pipeline, what each named component does and when to reach for it, and who owns which knobs | | Backtest literacy | What a backtest can and cannot tell you, the evidence gate, overfitting, and the honesty qualifiers on every run | | Strategy archetypes | The standard families of strategy, the strategies Parachute's own roster maps to, and how to read their evidence skeptically | | Tuning guides | Dial-by-dial reference for every component — what each knob does, which way to turn it, and who may turn it |

A note on vocabulary

Parachute deliberately uses industry-standard names for its components — the same words you would meet on other algorithmic-trading platforms — so that a strategy is legible to anyone who has built one before. Wherever a name was changed from an older internal one, the pages below note the former name once, in passing.