Terrified of buying the top in Gold, Bitcoin, or the Nasdaq? But afraid of missing the next leg up?
You aren't alone. This is the "Trader's Dilemma."
The solution isn't a crystal ball. It is a system.
Here is a robust framework catching "fat tails" while keeping Max Drawdown to just -15%.
Full logic below 🧵
You aren't alone. This is the "Trader's Dilemma."
The solution isn't a crystal ball. It is a system.
Here is a robust framework catching "fat tails" while keeping Max Drawdown to just -15%.
Full logic below 🧵
1/ The Philosophy
We are trading a classic Trend Following architecture. Assets: Gold ($GC), Nasdaq ($NQ), Micro Bitcoin ($MBT).
Why these three?
- High Volatility
- Hard Trends
- Low Correlation
We don't guess when they move. We set a trap and wait for price to trigger it.
We are trading a classic Trend Following architecture. Assets: Gold ($GC), Nasdaq ($NQ), Micro Bitcoin ($MBT).
Why these three?
- High Volatility
- Hard Trends
- Low Correlation
We don't guess when they move. We set a trap and wait for price to trigger it.
2/ The Setup
Simple systems are robust systems. This approach is time-tested.
We combine a Donchian Channel (Trend) with a Chandelier Stop (Risk).
The Rules:
• Timeframe: Daily
• Trend Filter: 20-Day Donchian
• Volatility: 5-Day ATR
ENTRY (The Breakout): IF Close > Highest High (20 days) THEN Buy Long.
Simple systems are robust systems. This approach is time-tested.
We combine a Donchian Channel (Trend) with a Chandelier Stop (Risk).
The Rules:
• Timeframe: Daily
• Trend Filter: 20-Day Donchian
• Volatility: 5-Day ATR
ENTRY (The Breakout): IF Close > Highest High (20 days) THEN Buy Long.
3/ Risk Management
This is where you survive.
POSITION SIZING (Volatility Targeting): We risk 2% of equity per trade.
• Stop Distance = 3 * ATR(5)
• Size = (Account * 0.02) / Stop Distance
The Insight: If Volatility (ATR) goes UP, our Position Size goes DOWN. We equalise risk across Bitcoin and Gold.
This is where you survive.
POSITION SIZING (Volatility Targeting): We risk 2% of equity per trade.
• Stop Distance = 3 * ATR(5)
• Size = (Account * 0.02) / Stop Distance
The Insight: If Volatility (ATR) goes UP, our Position Size goes DOWN. We equalise risk across Bitcoin and Gold.
4/ The Exit (Two-Stage Mechanism)
We use two exits:
A. Protective Stop (The Shield): Trail a stop at Highest High - (3 * ATR). Saves us if a breakout fails instantly.
B. Technical Exit (The Signal): Sell if Close < Lowest Low (20 days). Confirms the trend is actually over.
We use two exits:
A. Protective Stop (The Shield): Trail a stop at Highest High - (3 * ATR). Saves us if a breakout fails instantly.
B. Technical Exit (The Signal): Sell if Close < Lowest Low (20 days). Confirms the trend is actually over.
5/ The Hardest Part: Psychology
Look at the stats:
• Win Rate: 47.3%
• Avg Win: 4.30%
• Avg Loss: 2.06%
We are wrong more often than right.
But trading a system is psychologically easier than guessing tops and bottoms. You stop fighting the market and start executing the plan.
Look at the stats:
• Win Rate: 47.3%
• Avg Win: 4.30%
• Avg Loss: 2.06%
We are wrong more often than right.
But trading a system is psychologically easier than guessing tops and bottoms. You stop fighting the market and start executing the plan.
6/ Next Steps
Stop trying to time the exact bottom. You will miss. Start measuring the breakout.
Systematic execution > Emotional guessing.
Note: This is a foundational framework, not a "black box" solution. But it beats discretionary guessing every time.
Tools used: RealTest & Norgate Data.
If you found value in this breakdown:
- Retweet the first tweet to share the alpha.
- Follow me for more systematic trading deep dives.
Stop trying to time the exact bottom. You will miss. Start measuring the breakout.
Systematic execution > Emotional guessing.
Note: This is a foundational framework, not a "black box" solution. But it beats discretionary guessing every time.
Tools used: RealTest & Norgate Data.
If you found value in this breakdown:
- Retweet the first tweet to share the alpha.
- Follow me for more systematic trading deep dives.
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