title is a lil presumptuous i know.
BLUF: there are multiple ways to use the degengain indicator / script and i’ll give you the best strategies.
there are 3 strategies you can deploy, I’ll call them min-risk, mid-risk and max risk. when i first automated the script i deployed max risk to return 50x in a month when btc broke above ATH’s in jan.
the one contingency to keep in mind is that this indicator was built for trending markets, aka “BULL RUN” markets, when used otherwise will result in excessive reversals and will inevitably chop you out that’s why the default market is Bitcoin 4hr and Altcoins 1D.
Min Risk: it is reasonably safe to automate all signals coming out of the indicator, to Long ‘L’ signals and Hedge ‘HL’ signals contingent on 1x to 3x leverage and a stoploss of 3.5%. the only thing to look out for is what i’ll call a “chop zone” these are price actions where bitcoin remains within an area of suspended re-accumulation or distribution. see pics for example.
you will have to manually intervene in these situations by either closing the trade or holding all current positions. these chopzones usually happen after a massive rally before continuing, or at a top. unfortunately there’s no way to know if it’s a reaccumulation or a top(you could look at the volume to decide but i don’t).
MID RISK: After a bear-market, when the candles turn green, the first ‘L’ aka Long signal, has perhaps the highest rate or profitability of all the signals. You could long this with relatively high margin, 5x to 10x, 3.5% stoploss and hold this trade, ignoring all future, ‘Ls’and ‘HLs’ until the candles turn red again yielding the first ‘HS’ or ‘S’. see pics.
i will be honest with you, this strategy doesn’t always work, sometimes you get trapped in a double top and you’re forced to eat a 30% drawdown. it also leaves a lot of profit on the table. i suggest using a low funding exchange like deribit for this strategy because this is a HTF (higher time frame) strategy.
MAX RISK: this combines the two previously mentioned strategies for max return but incurs maximum risk and a lot more human intervention is needed. the strategy is to Long the first ‘L’ signal with high leverage, say 10x to 20X and then add 1x margin with each subsequent ‘L’ signal and exiting that 1x Leverage with each ‘HL’ signal. so assuming you’re trading 0.1 BTC, long 20x is 2 BTC, then subsequent 0.1 BTC long, bringing it up to a total 2.1 BTC, you then hedge the ‘HL’ by selling the 0.1 BTC for a profit (most of the time). as mentioned earlier you do have to essentially guess if a chopzone is a top or re accumulation. And of course exit all trades on the first “HS”or “S” signal.
Random addon: funny thing about chopzones, if you reverse the action of the signal aka Long ‘HL’ and hedge ‘L’, you would be profitable. perhaps i’ll find a way to automate this too.
Random addon #2: you’re a proper degen so you’re feeling like day trading and taking on extra risk. although the HL and HL signals are hedge signals aka return to cash, you could trade them with a 2% TP and 2% SL. aka Short HL with 2% TP and 2% SL and long HS with 2% TP and 2% SL. this requires constant supervision and of course should not be deployed during chop zones.
contact me for all inquires here!
nOt fInAnCiAl aDvIcE.