Monday, April 4, 2022

Low leverage crypto opportunities

There are actually some cases in which trading on leverage can be quite profitable and no, it's not because you get bigger rewards, the answer is in funding. In particular, negative funding.

Why do coins rise with negative funding?
Usually, there is an on-chain incentive to stake the coin, and people holding the spot version are trying to protect their downside.
This is a good strategy too but it can be expensive and even harder to time than buying and holding for a swing trade.
Instead, look for long opportunities rather than try to hedge the market, which is in itself a slippery art best left for professionals.

Some recent successful examples of low leverage longs.

LUNA from early March has been on a tear in price. Rising from 60 to today’s 115. In spite of the insane fud around the ponzinomics of how UST is collateralized, the market has been driving the price higher. All while holding LUNA on low leverage you would have been collecting sweet sweet funding in the process.

LOOKS is another ponzified altcoin with an interesting history. Created as a gas rebate airdrop for opeansea.io users, LOOKS has a staking program that has yielded returns in the thousands. Great, another leverage altcoin that requires hedging and is trending higher.

What about the liquidation risk?
This is where the optimal position size is important for your portfolio. You need to ensure you are not using more than 1x leverage on your brokerage account and second, the contract is perpetual. Don’t use futures that expire, this will screw up the strategy in a hurry as you won’t get paid and the contract could expire at a loss.

I wrote a bit more detail on the topic in a medium post yesterday while waiting for a flight if you are interested. I just thought it was helpful to show that not all leverage trading is bad and toxic to crypto, there are in fact rather simple and straightforward ways to benefit greatly without taking much risk.
But yeah, most people will blow up on leverage because they are greedy and unwilling to be patient for the right opportunities. For the few that are willing to respect leverage this might be a good strategy to add to the arsenal.

Tuesday, March 15, 2022

I finally developed a crypto screener for meantrades

About 10 years too late for the really easy money in crypto but I'm finally here.


At long last a toolkit for trading the crypto markets which applies my unique approach directly inspired by the meantrades system

 https://coinrotator.app

A crypto market screener for bullish and bearish scenarios.


Employing the SuperTrend as the primary trend, CoinRotator scans the top 1000 coins against BTC, ETH, and USDT and finds trends on the daily time frame which are aligned across all 3 markets.



This screening method is further enhanced by applying a filter using the Weekly SuperTrend to determine which markets are aligned on the higher time frame and then only taking those trades. The trend is indeed in alignment if both the Weekly and Daily signals are printing in the same direction.




Recent trades that have performed well include:


BETA 22%

OSMO 35%

RUNE 50%


One current trade that I have entered which is not in alignment with the weekly SuperTrend is JASMY. This coin has a very high rate of volatility when it moves to the upside so it is worth taking a chance on a counter-trend BUY.


I even built a bot to alert CryptoTwitter when signals change.

You can follow it here 



Join my discord to talk about specific trades. Always happy to talk strategy and specifics of the crypto screener.

Wednesday, October 15, 2014

Why is Volatility good for some systems and dangerous for others?

I'm often find myself reading popular blogs and forums which talk about volatility as a dangerous development in markets, and Forex in particular. Granted, no matter the system, when markets accelerate in their transactions there is always the possibility of errors, no matter how robust or automated the process. In the case of my own trading method, times of decreased volatility are a strong indicator of drawdowns.

So I asked myself, what is it about Meantrades that makes volatility a necessary and good thing? The answer surprised me a little, and makes me doubt what I discovered as it seems I am on to something that most retail traders are unaware of. And how can that be? I'm just a regular guy who happens to be a forex trader.

Volatility is a measure of uncertainty.

Meantrades signals are determined when a reversal is seen short term on a longer trend. For example, if the daily trend is long, Meantrades will only see a buy signal if there is a swift selloff and rapid reversal. The amount of time necessary for this reversal is usually around 12-48 hours, anything longer and the daily trend is at risk of reversing and  this prevents signals on smaller time frames to fail to appear. I should mention then, that the past few years I have traded nothing smaller than an hourly chart (and the range bar equivalent).

But, what exactly is being measured in Forex volatility? 

The term is often used interchangeably with acceleration and range. But, what is truly important from my perspective, is that it refers to uncertain direction in the market with an expanding price range (this requires an objective assessment which traders demarcate with options trading, most commonly used for commercial hedging rather than outright speculation). All other meanings are interesting but not very relevant for my needs as a directional trader.

I think it is worth delving into popular standard definitions as most people simply have an emotional or experiential reaction to the news of "volatility" in the markets. I too was vulnerable to this for years as I was glued to CNBC and then Bloomberg on the tv in the background. I've since gone dark and rarely, if ever, turn on the news when i am trading. I have even extended this to popular forums and chat rooms where trade signals are issued. I find that no matter how useful the information, it will eventually conflict with my own signals. Inevitably the signals I choose to ignore because of external information will be the screaming winners.

Investopedia defines volatility as either:

1)A statistical measure of the dispersion of returns for a given security or market index.

Or:


2)A variable in option pricing formulas showing the extent to which the return of the underlying asset will fluctuate between now and the option's expiration. 


The point is the press almost never refers to either of these definitions when they report on volatile markets. All the are reporting on is that a closely watched index has dropped a larger percentage than in previous sessions. In itself this is of course, important and newsworthy, but for traders it creates false assumptions.

Why do bloggers often talk about the dangers of volatility in trading?

Simple. Most trading systems are static in their application. They do not seek a dynamic pattern to determine entries and exits. Although meantrades uses no "feel"or artificial intelligence. It seeks a "nesting" pattern which only works well when volatility is present in the forex market. Perhaps this is the main differentiation between Meantrades and systems such as these. There have been popular systems over the years which attempt to tackle this but often their complexity extends far beyond the capacities of retail traders. Which frankly is a nice thought exercise but without vast economic resources, they are just not satisfactory solutions for the average trader. The buzzword associated with these "revolutionary" systems is: adaptive. Two of the more interesting are well presented in video format:

Summers Bars are very similar to constant range bars. However they perform one extra adaptive function which really caught my eye. They take into account the average volume in previous bars and begin to print as volatility increases. This smooths out indicators as well as gives you a unique technical perspective which standard charts cannot offer. The results are not necessarily an improvement but, like meantrades, it puts you in and takes you out of the market in less crowded junctures.

Adaptive Moving Averages were popularized by Perry Kaufman. According to Investopedia this approach would:
allow winners to run. As a trend comes to an end and prices consolidate, the moving average would move closer to the current market action and, in theory, allow the trader to keep most of the gains captured during the trend.

However just as static approaches to markets have proven, this very interesting attempt was nothing more in the end than intellectual stimulus for whipsawed traders everywhere. As the article mentions in conclusion from a great book on backtested technical indicators:

 "Although the adaptive moving average is an interesting newer idea with considerable intellectual appeal, our preliminary tests fail to show any real practical advantage to this more complex trend smoothing method."


Volatility, the most dynamic of indicators.

Trading static systems in a dynamic market will yield excellent results some of the time, and dreadful results the rest of the time. Using a crass simplification, mean reversion trading will yield tiny gains 70 percent of the time while breakout systems will get chopped to death during the same market conditions. While breakout systems will reap huge rewards during the other 30 percent of the time while mean reversion systems will lose all their gains in the same market environment. I have seen some try to create a barometer to transfer between each method with fairly effective results, and for this I think they alone get how retail trading is done. For the rest, there is just heartache without much education other than to learn how to admit defeat in the face of an unflinching forex market.

The trick for most traders is to learn to embrace volatility, not as a dangerous side effect but as a surfer would; acknowledge the force of nature which provides you with the waves to surf. It's best o remember that nobody ever got rich in a still marketplace.

Thursday, October 9, 2014

Drawbacks of my trend systems

Although no system is perfect, I think it is a healthy exercise to consider what are some weaknesses inherent in my approach to trend trading.

Signals sometimes reveal that a trend has ended a little too early. Or in yesterday's trade, a little too late.

The problem of the Hard Right Edge
world trade center mall chaos on display



  • A signal to go long is actually a signal to go short in a much more important price trend. The problem is you never know when or where than much more powerful price trend will begin. This is what you might refer to as the illusion of control. No matter how many technical indicators you place on your chart or how thorough your backtest reveals an edge, making each and every trade is an act of random faith that price will behave in the accustomed fashion. As we observed yesterday, things can go wrong all at the same time and there is little one can do to protect the downside than to keep risk to a minimum via position sizing.



  • Profitable signals are usually pared by periods of random drawdowns which have no discernible beginning or end. These signals can be seen in non-traditional trading markets such as pre-construction real estate buying trends, a colleague of mine has cataloged popular Miami condos that yield seeking traders are gravitating towards in Miami these days. Before reading on, check them out here: http://miami-real-estate-trends.blogspot.com . Last week saw one of the best single day returns while this week saw all signals sucked into the false dollar bull run.


  • Profitable signals appear at random intervals and can continue for an indeterminate period.
A few golden rule lists I have found both counter-intuitive and true:

Gartman's 20 Rules of Trading

Tim Morge, Master Your Trading Master Yourself

8 Rules that Simplify Futures Trading

Today's Signals 10/9/14


Current positions:
Short EUR/JPY 137.46 or higher
Short GBP/JPY 174.37
Buy USD/CHF .9508 or lower
Short GBP/USD 1.6161 or higher
Buy USD/JPY 107.99 or lower
Buy USD/CAD 1.1116 or lower

Closed Positions:
Buy EUR/AUD 1.4344 +42
Short EUR/USD 1.2613 -72
Short XAU/USD 1204.34 -86
Long USD/CHF .9614 -63
Long USD/CAD 1.1167 stopped breakeven
Short AUD/USD .8792 stopped breakeven
Short GBP/USD 1.6059 stopped breakeven


*Stops are based on the previous swing high or low prior to the signal and require an hourly close above or below this swing high or low; they are not based on a strict price.

Wednesday, October 8, 2014

Today's Signals 10/8/14

Current Positions:

Buy EUR/AUD 1.4344 or lower
Short EUR/USD 1.2613 or higher
Short XAU/USD 1204.34 or higher
Long USD/CHF .9614 or lower
Long USD/CAD 1.1167 or lower
Short AUD/USD .8792 or higher
Short GBP/USD 1.6059 or higher

Closed Positions:

Short GBP/USD 1.6039 -69
Short AUD/USD .8738 -55

*Stops are based on the previous swing high or low prior to the signal and require an hourly close above or below this swing high or low; they are not based on a strict price.

Tuesday, October 7, 2014

Daily Signals 10/7/14

Current Positions:

Short EUR/USD 1.2613 or higher
Short GBP/USD 1.6039 or higher
Short AUD/USD .8738 or higher
Short XAU/USD 1204.34 or higher
Long USD/CHF .9614 or lower

Closed Positions:

Buy EUR/AUD 1.4400 stopped breakeven

*Stops are based on the previous swing high or low prior to the signal and require an hourly close above or below this swing high or low; they are not based on a strict price.