Draw the baseline first, with costs already visible

Before any strategy: buy and hold, plotted. It is the control, and without it you have no way to know whether a result is skill or a rising market.

The control comes first for a reason

If you build the strategy first, you will compare it to nothing and conclude it works. If you build the control first, every later result arrives with a comparison already attached.

Buy and hold is a single line: compound the return series from lesson 3 and plot it. That is the whole implementation, and it takes ten minutes with an assistant.

Costs are on from this line, not added later

Here is a decision this course makes for you: your equity curve renders a cost line from the very first chart. The mechanics of commissions and slippage come in unit 3; the habit starts now.

Set a default and make it visible on the chart even when it is zero. Buy and hold has almost no costs — one purchase — so the two lines sit on top of each other and the pair looks pointless. That is exactly the point. When the strategy trades two hundred times, the gap between the lines is the first thing you see, and you will not have to remember to look for it.

Nothing in this course ever shows a cost-free equity curve as an achievement. A curve without costs is not a simpler version of the truth; it is a different and more flattering claim.

Three numbers under the chart

Not a dashboard. Three, because more invites cherry-picking:

• Total return over the window, and the window's dates. A percentage without dates is meaningless.
• Maximum drawdown — worst peak-to-trough. Lesson 13 does this properly; a rough version now is enough to stop you reading the curve as if it went straight up.
• Number of trades — one for buy and hold, and the number that makes costs matter later.

Ask your assistant for the control, then read it

This is the adult loop from course 1 applied here. Ask for the buy-and-hold curve and read the diff for four specific things:

1. Does it compound by multiplying, or does it sum returns anywhere?
2. Which close column does it use?
3. Does the first bar produce a return? It cannot — there is nothing before it. An off-by-one here shifts your entire curve by a day, which is a look-ahead bug in miniature and unit 3's whole subject.
4. What does it draw when the series is empty or one bar long?

Assistants are reliably good at plotting and reliably careless at the first bar. That is where to spend your attention.

Try it now

Plot buy and hold for one symbol over the longest window your plan gives you, with the cost line switched on at zero. Screenshot it. Every strategy you build for the rest of this course gets compared against this picture, and having it on screen makes cherry-picking harder.