trading-strategy

name: trading-strategy description: Use this skill for developing and evaluating trading strategies by synthesizing technical analysis, market sentiment, and risk management principles into actionable trading recommendations.

Overview

This skill provides comprehensive guidance on synthesizing multiple analyses into coherent trading strategies and actionable recommendations. Use this for final decision-making and trade structuring.

Instructions

1. Synthesize Multiple Signals

Integrate analysis from different sources:

Technical Analysis: Trend, momentum, support/resistance
Sentiment Analysis: Market mood, fear/greed levels
Real-Time Data: Order flow, liquidity, recent price action

Weight each component by:

Confidence level (higher confidence = higher weight)
Timeframe alignment (multiple timeframes agreeing)
Signal strength (strong vs weak signals)

2. Resolve Conflicting Signals

When analyses disagree:

Technical bullish, Sentiment bearish: Often means "buy the dip" if technical is strong
Technical bearish, Sentiment bullish: Often means "sell the rally" if technical is strong
Mixed timeframes: Defer to higher timeframe for trend direction
Low confidence all around: Recommend staying out or reducing position size

3. Generate eval_note (-1 to 1 scale)

Strong Buy Signals (0.6 to 1.0)

Multiple timeframes aligned bullish
Technical indicators show strong uptrend
Sentiment at extreme fear (contrarian buy)
High confidence from all analyses

Moderate Buy (0.3 to 0.6)

Majority of signals bullish
Some conflicting indicators
Medium confidence
Trend supports upside

Neutral (−0.3 to 0.3)

Mixed signals across analyses
Ranging market conditions
Low confidence or uncertainty
Wait for clearer setup

Moderate Sell (−0.6 to −0.3)

Majority of signals bearish
Some conflicting indicators
Medium confidence
Trend supports downside

Strong Sell (−1.0 to −0.6)

Multiple timeframes aligned bearish
Technical indicators show strong downtrend
Sentiment at extreme greed (contrarian sell)
High confidence from all analyses

4. Risk Assessment

Consider before making recommendations:

Volatility: High volatility = reduce position size
Liquidity: Low liquidity = widen stops, smaller size
Time in market: Newer trends are riskier
Correlation: Diversification reduces risk
Black swan risk: Extreme events possible

5. Position Sizing Guidelines

Based on confidence and volatility:

High confidence, Low volatility: Larger positions (up to max allowed)
High confidence, High volatility: Medium positions
Medium confidence, Any volatility: Smaller positions
Low confidence: Minimal or no position

6. Entry and Exit Strategy

Entry Points

Strong signals: Enter on market orders or limit near current price
Medium signals: Enter on pullbacks to support
Weak signals: Scale in gradually

Stop Loss Placement

Below recent swing low (for longs)
Above recent swing high (for shorts)
Below key moving averages
Account for volatility (wider stops in volatile markets)

Take Profit Targets

First target: 1-2 risk/reward ratio
Second target: Major resistance/support level
Final target: Trailing stop to ride trend

7. Timeframe Considerations

Short-term trading (minutes to hours)

Focus on 1H and below timeframes
More sensitive to real-time data and sentiment shifts
Tighter stops and quicker exits

Medium-term trading (days to weeks)

Focus on 4H and daily timeframes
Align with daily trend direction
Wider stops, let positions breathe

Long-term trading (weeks to months)

Focus on daily and weekly timeframes
Strong fundamental and macro support needed
Very wide stops, focus on major trend

8. Market Regime Adaptation

Trending Markets

Follow the trend direction
Use pullbacks for entries
Trail stops to ride trends
Ignore minor counter-trend signals

Ranging Markets

Fade extremes (sell highs, buy lows)
Tighter profit targets
Avoid trend-following strategies
Reduce position sizes

Volatile Markets

Wider stops to avoid whipsaws
Smaller positions
Quick profit taking
Consider staying out if too chaotic

Output Format

When synthesizing into a trading recommendation, provide:

{
  "eval_note": <float -1 to 1>,
  "confidence": <float 0-1>,
  "eval_note_description": "Comprehensive synthesis of all analyses with clear reasoning",
  "key_factors": [
    "Technical: Strong uptrend confirmed",
    "Sentiment: Extreme fear (contrarian buy)",
    "Real-time: Strong buying pressure"
  ],
  "recommended_action": "BUY" | "SELL" | "HOLD",
  "position_size": "FULL" | "MEDIUM" | "SMALL" | "NONE",
  "entry_strategy": "Market order | Limit at X | Scale in on pullback",
  "stop_loss": "Below X at Y",
  "take_profit": ["First: X at R:R 1.5", "Second: Y at resistance", "Final: Trailing stop"]
}

Decision Framework

Strong Conviction Trade Checklist

Multiple timeframes aligned
2+ independent confirmations
Clear support/resistance levels identified
Sentiment supports the move (or contrarian extreme)
Risk/reward ratio > 2:1
Market structure supportive
Liquidity adequate

Trade Rejection Criteria

Mixed signals with no clear edge
Low confidence across analyses
Highly uncertain market conditions
Risk/reward ratio < 1.5:1
Counter to strong higher timeframe trend
Illiquid or highly manipulated market

Best Practices

Never force trades: Wait for high-probability setups
Quality over quantity: Fewer high-quality trades beat many mediocre trades
Always know your exit: Plan stop loss and take profit before entry
Manage risk first: Protect capital over maximizing gains
Adapt to changing conditions: What works in trending markets fails in ranging markets
Keep it simple: Complex strategies with many rules often underperform
Document reasoning: Track what works and what doesn't
Stay disciplined: Stick to your strategy and don't chase
Cut losses quickly: Don't hope losing trades will reverse
Let winners run: Trail stops on profitable positions

Common Mistakes to Avoid

Over-trading in low-conviction setups
Revenge trading after losses
Moving stops further away (hoping for reversal)
Adding to losing positions
Taking profits too early on winning trades
Ignoring risk management rules
Trading against the higher timeframe trend
Fighting the tape (market momentum)
Letting emotions override analysis
Failing to adapt strategy to market regime