Strategies

Effective risk management not only ensures capital preservation and consistent performance across trading and investment strategies but allows for larger position sizing and compounding. You must have a fluid bias; the market doesn't care what you believe, and it doesn't give participation trophies. Probability and the law of large numbers are all that matter to consistently make money in the long run. Do not mistake luck with skill; the only skill is discipline and emotional control. I outline my preferred methods here.

• Position Size: Identify stop-loss and allocate no more than 1% of capital per trade position. I limit exposure to 0.5% on volatile assets (e.g., alt coins) due to higher volatility. 3% for investment positions max.
• Stop Loss: Always identify the price at which you no longer want to be in the position, often below/above key support and resistance.
• Taking Profits: Constantly take a portion of profits as price moves in your favor. You never know when it will come back against you sharply. Plus, you have more cash to compound and buy in lower!
• Dynamic Stop Loss: Use Average True Range (ATR), weekly/monthly opens (with breadth), or DEMA cross signals to set dynamic stop-loss levels based on asset volatility, ensuring dynamic risk adjustment.
• Portfolio Rebalance: Diversify investments between cash and assets, rebalance quarterly to mitigate systemic risks.
• Over-Analysis: Simplify: Find your system, keep it simple, and stick to it. Over-analyzing with too many lines and indicators can lead to paralysis by analysis from all the noise. Try to stick to just a few select assets at first.
• Tax Implications: Consider capital gains tax implications of closing large positions; you may want to move jurisdictions.
• Market Psychology: You are the biggest risk to your own portfolio; control your emotions, understand market dynamics, and understand risk management.

My nuanced PA strategy identifies high-probability systematic patterns, high volume nodes (HVN, price ranges of higher activity), and investor sentiment to identify high-probability setups on structural changes in price.

Analysis Strategy

• Set Up Analysis: Elliott Wave (Larger Degree Only): Analyze high-degree wave patterns to identify the stronger trends, avoiding noise in smaller timeframes.
• Set Up Analysis: Fibonacci & High Volume Nodes: Combine Fibonacci retracements with HVN to identify targets with high-probability trend reversals.
• Targets: High Volume Node Major Support/Resistances: Areas of high volume draw price like a magnet due to the network effect and demand/supply waiting.
• Targets: Pivot Points and EMAs: Pivot points and 200 EMAs make targets simple and draw price like magnets due to the network effect.
• Targets: Cyclical Extreme Identification: My models help identify macro extremes in investor sentiment and price action so I can maximize risk management styles and profits.
• The Signal: Structural Break & Divergences: The system is set, the technicals are ready, and the current trend has been violated, signaling the entry.

Signals

• Breakouts: Symmetrical Triangles: A terminal pattern (abcde) that often signals a final thrust in price to end the current trend.
• Breakouts: Rectangle Ranges: Ranges or channels have a higher probability of breakout the more times the boundaries are tested, each time getting weaker as demand and supply are consumed.
• Structural Break: The current trend’s series of higher highs and higher lows (or vice versa) is violated, creating a potential new trend.

Risk Management

• Position Size: Allocate no more than 1% of capital per trade on reliable assets (e.g., blue-chip stocks, BTC). Limit exposure to 0.5% per trade on volatile assets (e.g., alt coins) due to higher uncertainty.
• Entry: Key level break signal.
• Stop Loss: Invalidation levels of technical price structure.
• Take Profit #1, Stop Loss Move & Position Reclassification: Allow for a decent risk-reward ratio and high-probability target on partial Take Profit #1. Once hit, move stop-loss to break-even and reclassify trade as 'risk-off,' allowing for new trades to be opened. This locks in small profits and protects against price coming back against you with a wide range, keeping your account protected from a dramatic trend change. You can always re-enter on the next signal. Successful traders make their money off a handful of trades per year.
• 3% Total Risk Across All Open Trades: Cap cumulative open risk at 3% of portfolio to prevent overexposure during active trading sessions.
• Take Profit #2: Take Profit #2 and closing trades fully will be done at market extreme readings. Holding can be months or years.

This systematic strategy uses Double Exponential Moving Averages (DEMA) with percentage bands as a trend-following strategy. My dissertation explores this in detail, providing a robust framework for technical trading. It can be used on all assets and timeframes with exchange fees in mind.

FREE: Read the Dissertation

Risk Management

• Position Size: 1% for risk-neutral traders, 3% for risk-tolerant traders.
• Entry: Limit order at EMA 5 on DEMA Cross with PBR Threshold broken.
• Stop Loss: Below/above the first wick before the DEMA cross.
• 1 Position: Only one position open at a time; you are likely to be in a position 90% of the time.
• Close Position: Counter signal.

Investing requires patience and precise timing to capture high-growth opportunities. With so many to choose from, it’s important to spread your bets among sectors: Memes, Layer 1 and 2 solutions, Gaming, DeFi, Exchange, etc. Yield farming is a bonus but not as important as timing, as you may be sitting at -70% from buy-in to farm worthless tokens.

Analysis Strategy

• Research: Look for strong fundamental use cases, tailwind sector trends (like AI), a solid team, and a real user base.
• Alt-Coin Golden Pocket: Target entries at the 0.78 Fibonacci retracement level of the macro BTC cycle for optimal risk-reward.
• Price Action Signals: Use price action trading signals for trade entries with tight risk management.
• HODL: Hold through volatility.

Risk Management

• Position Size: Small portion of your portfolio you are willing to lose.
• Average True Range (ATR): Set stops below the ATR, as price action outside the range suggests caution as something is shifting.
• Take Profit: Alts will quickly round-trip any gains given. Take profits along the way and don’t be greedy.

Bitcoin will be the most valuable asset soon due to its engineered scarcity, exponential adoption curve via corporate and nation-state demand, decentralized nature, and network power (1Z/H). Companies like StrategyB, 21, Coinbase, and miners will trade >1 BTC Beta, so a portion of my portfolio is allocated to them. Here are a few strategies for buying; a combination of all is optimal.

Accumulation Strategy

• Dollar Cost Averaging (DCA): Invest a fixed amount regularly (e.g., weekly) to reduce volatility impact and build positions over time. Style: Defensive, Accumulation Size: Small, Accumulation Price: Average, Requirements: Steady allocation of earnings at disciplined intervals, ignoring price action.
• Fibonacci Buys: 'Buy the Dip' Enter at key macro Fibonacci retracement levels (e.g., 0.382, 0.5, 0.618), deploying larger capital at each point. Style: Aggressive/Defensive, Accumulation Size: Medium, Accumulation Price: Below average, Requirements: Patience, capital.
• Weekly RSI Below 30: If Weekly RSI goes below 30 (which has only happened three times), enter with large capital at this high-probability cyclical bottom, which has never failed. Style: Aggressive, Accumulation Size: Large, Accumulation Price: Very low, Requirements: Patience (years), capital.

Risk Management

• Self Custody: Not your keys, not your coins. Protect against exchanges locking your wealth up when they collapse by keeping your coins in self-custody hardware wallets.
• Hedge: Calculate short positions and covered call options to mitigate downside risk while you HODL.

Derivatives trading leverages advanced strategies to generate yield and hedge risk through futures and options.

• BTC Yield: Use BTC-based derivatives to generate yield through covered calls or cash-secured puts while you HODL.
• USD Yield: Trade USD-based derivatives (e.g., stablecoin futures) to capitalize on low-volatility yield opportunities.
• Hedging: Use derivatives and perpetual shorts to hedge HODL positions.
• MSTR, STRK, Etc.: There is an abundance of financial instruments hitting the market, allowing you to gain yield and partial BTC price exposures.

Risk Management

• Self-Contained: Risk management is designed within the contracts themselves to your specifications.