Home / ml4t / skills · backtest/cost-model/SKILL.md · GitHub

ml4t-cost-model skillA

ml4t-cost-model is agent-read markdown (skill) from ml4t/skills: Commission, slippage, and market-impact cost models for realistic strategy simulation. Use when backtesting to ensure P&L accounts for transaction costs..

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What the file says

# Backtest Cost Model

Once a strategy passes the feasibility screen, the backtest engine still needs explicit cost settings. If commission, slippage, and impact are left at optimistic defaults, the simulation is still fiction.

## The Problem

Most mistakes at this stage are implementation mistakes: missing volume in the feed, flat slippage for every asset, or no participation cap on large orders. The result is a backtest that claims to include costs while still materially understating them.

## The Pattern

### WRONG
```python
import numpy as np

# Zero-cost backtest - fiction
positions = compute_positions(signals)
gross_returns = positions * asset_returns
sharpe = gross_returns.mean() / gross_returns.std() * np.sqrt(252)  # overstated
```

### CORRECT
```python
import numpy as np

def net_returns_with_costs(
    weights: np.ndarray,     # target weight per BAR for ONE asset, not shares
    asset_returns: np.ndarray,
    prices: np.ndarray,
    adv_shares: np.ndarray,  # average daily volume in shares, per bar
    daily_vol: np.ndarray,   # daily return volatility, per bar
    nav: float,
    commission_bps: float = 1.0,
    spread_bps: float = 5.0,
…

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How to install

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mdr add ml4t/skills/ml4t-cost-model@git:20260901.297789f
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Versions

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git:20260901.297789f latest2026-09-01 297789f 5,197 BA view · diff
git:20260901.cf90cdd2026-09-01 cf90cdd 5,034 BA view · diff
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git:20260528.303089e2026-05-28 303089e 4,761 BA view

Audit of the latest version

A  17 of 17 checks passed. Deterministic, no model, same answer every run.
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  • pass: Frontmatter declares a name
  • pass: Frontmatter declares a description
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  • pass: No zero-width or bidi control characters
  • pass: No instruction hidden inside an HTML comment
  • pass: No link to an exfiltration or paste host
  • pass: No credential-shaped string
  • pass: No instruction to send local credentials anywhere
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Source

GitHub

ml4t/skills · 19 stars · license Apache-2.0 · pushed 2026-09-24 · branch main

API

GET https://markdownregistry.com/api/v1/artifacts/art_q4rk3mzizma5fjjq
GET https://markdownregistry.com/api/v1/resolve?ref=ml4t/skills/ml4t-cost-model
GET https://markdownregistry.com/api/v1/blob/6fe10bce1b17e7f1b1a551aab0eea63a3e13042718ac43a0cce9fbaa532b129c

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