ave-trading

name	ave-trading
description	AI-driven DeFi trading signal generation with Kelly-criterion position sizing and multi-layer risk controls
version	1.0.0
author	Alchemist-X
tags	["defi","trading","ai","signals","risk-management"]

AVE Trading Skill

Overview

Generates trading signals from AVE monitoring data, sizes positions using quarter-Kelly criterion, and manages the full position lifecycle through a 7-tier review system. Applies hard service-layer risk guards (drawdown halt, exposure caps, per-trade limits) to every decision before execution.

Capabilities

Capability	Description
Signal Generation	Momentum-based heuristic analysis of on-chain price data producing buy/sell direction with confidence scoring
Position Sizing	1/4 Kelly criterion: quarterKelly = (edge * confidence) / (4 * odds) with edge = predictedReturn - riskPremium
Risk Premium Computation	Dynamic premium based on contract risk level, tax burden, and liquidity depth
Entry Planning	Rank candidates by monthly return, cap batch exposure at 20% of bankroll, limit to top N entries
Position Review	7-tier review cascade evaluating every open position against current market prices
Risk Guards	Portfolio-level hard limits enforced at the service layer before any decision reaches execution

Decision Pipeline

  AVE Market Pulse                         AVE Entry Planner
  ================                         ==================

  AvePulseCandidate[]                      For each candidate:
        |                                    1. estimatePredictedReturn()
        |                                       - direction (buy/sell)
  Pulse Filters                                 - confidence (0.5 + |change| * 2, cap 0.9)
  (vol > $10k, liq > $5k,                      - predictedReturn = |change| * confidence
   no honeypots, tax < 10%)                  2. computeRiskPremium()
        |                                       - base: 2%
  Composite Score Sort                          - medium risk: +1%
  log10(vol) * log10(liq) * risk                - high/critical risk: +5%
        |                                       - low liquidity (<$50k): +2%
  Top N candidates                              - tax burden: +totalTax/100
        |                                    3. edge = predictedReturn - riskPremium
        v                                    4. calculateAveKelly({ edge, confidence })
  +------------------+                      5. Monthly return = edge / holdingPeriod
  | Entry Planner    | ------+
  +------------------+       |           AVE Position Review
        |                    |           ====================
  +------------------+       |
  | Position Review  | ------+--- composeAveDecisions() ---+
  +------------------+                                     |
                                                    applyRiskGuards()
                                                           |
                                                   TradeDecisionSet

Position Review: 7-Tier Cascade

Every open position is evaluated in priority order. The first matching tier determines the action.

Tier	Basis	Action	Exit %	Confidence
1	Stop-loss breached	close	100%	medium
2	Profit target hit	close	100%	high
3	Edge gone negative (< -5%)	close	100%	medium
4	Near stop-loss (within 30% of threshold)	reduce	50%	low
5	Edge weakening (0% to -5%)	reduce	50%	low
6	Edge positive (> +2%)	hold	0%	medium
7	Stable hold (edge near zero)	hold	0%	low

Tiers 3, 4, 5, and 7 set humanReviewFlag: true for manual oversight.

Risk Parameters

Service-Layer Hard Limits

Parameter	Default	Env Variable	Description
Drawdown stop	30%	DRAWDOWN_STOP_PCT	Halt all trading if portfolio drawdown exceeds threshold
Per-position stop-loss	30%	POSITION_STOP_LOSS_PCT	Close position if unrealized loss exceeds threshold
Max total exposure	80%	MAX_TOTAL_EXPOSURE_PCT	Cap total deployed capital as % of bankroll
Max per-trade size	15%	MAX_TRADE_PCT	Cap any single trade as % of bankroll
Max open positions	22	MAX_POSITIONS	Hard limit on concurrent positions
Min trade size	$5	MIN_TRADE_USD	Floor for trade notional
Liquidity cap	5% of pair TVL	--	Max trade size relative to pair liquidity

Entry Planner Defaults

Parameter	Default	Description
Kelly fraction	1/4 (quarter Kelly)	Conservative sizing to limit variance
Base risk premium	2%	Minimum hurdle subtracted from predicted return
Minimum edge	0.5%	Entries below this edge are skipped
Holding period	1 month	Assumed holding period for monthly return calculation
Max new entries per batch	4	Limit on new positions opened per cycle
Batch cap	20% of bankroll	Total capital allocated across all new entries in one cycle

Usage

Generate Entry Plans

import { planAveEntries } from "services/orchestrator/src/runtime/ave-entry-planner.js";

const plans = planAveEntries(
  filteredCandidates,
  {
    bankrollUsd: 10_000,
    existingPositions: ["0x...abc-ethereum"],
  },
  {
    maxNewEntries: 4,
    batchCapPct: 0.2,
    stopLossPct: 0.3,
    minEdge: 0.005,
  }
);

// plans: AveEntryPlan[] sorted by monthly return, batch-capped

Review Open Positions

import { reviewAvePositions } from "services/orchestrator/src/review/ave-position-review.js";

const reviews = reviewAvePositions(
  currentPositions,
  currentPriceMap,    // Map<tokenId, priceUsd>
  {
    stopLossPct: 0.3,
    targetProfitPct: 0.5,  // optional
  }
);

for (const review of reviews) {
  // review.action: "hold" | "reduce" | "close"
  // review.basis:  "stop-loss-breached" | "profit-target-hit" | ...
  // review.decision: TradeDecision (ready for execution)
}

Full Pipeline Execution

import { runAveDirectPipeline } from "services/orchestrator/src/runtime/ave-direct-runtime.js";

const result = await runAveDirectPipeline(
  {
    runId: crypto.randomUUID(),
    mode: "full",
    bankrollUsd: 10_000,
    totalEquityUsd: 10_000,
    positions: [],
    openPositionCount: 0,
  },
  orchestratorConfig
);

// result.decisionSet: TradeDecisionSet with all decisions
// result.entryPlans: new positions planned
// result.positionReviews: existing position evaluations

Output Format

AveEntryPlan

{
  "tokenAddress": "0x6982508...a011",
  "chain": "ethereum",
  "tokenId": "0x6982508...a011-ethereum",
  "tokenSymbol": "PEPE",
  "direction": "buy",
  "sizeUsd": 142.50,
  "confidence": 0.67,
  "predictedReturn": 0.057,
  "riskPremium": 0.02,
  "edge": 0.037,
  "fullKellyPct": 0.02479,
  "quarterKellyPct": 0.00620,
  "monthlyReturn": 0.037,
  "holdingPeriodMonths": 1,
  "currentPriceUsd": 0.00001234,
  "liquidityUsd": 18500000,
  "riskLevel": "low",
  "confidenceBucket": "medium-high"
}

TradeDecisionSet (final output)

{
  "run_id": "a1b2c3d4-...",
  "runtime": "ave-direct-runtime",
  "generated_at_utc": "2026-04-13T12:00:00.000Z",
  "bankroll_usd": 10000,
  "mode": "full",
  "decisions": [
    {
      "action": "open",
      "event_slug": "ethereum",
      "market_slug": "0x698...a011-ethereum",
      "token_id": "0x698...a011-ethereum",
      "token_symbol": "PEPE",
      "side": "BUY",
      "notional_usd": 142.50,
      "order_type": "FOK",
      "ai_prob": 0.67,
      "market_prob": 0.50,
      "edge": 0.037,
      "confidence": "medium-high",
      "thesis_md": "**PEPE** on ethereum: Price $0.000012, 24h change +8.50%. Direction: BUY with 67.0% confidence. Edge: 3.70%. Quarter Kelly size: $142.50.",
      "sources": [
        {
          "title": "AVE token data for PEPE",
          "url": "https://ave.ai/token/0x698...a011-ethereum",
          "retrieved_at_utc": "2026-04-13T12:00:00.000Z"
        }
      ],
      "full_kelly_pct": 0.02479,
      "quarter_kelly_pct": 0.00620,
      "liquidity_cap_usd": 925000,
      "stop_loss_pct": 0.3,
      "resolution_track_required": false
    }
  ],
  "artifacts": []
}

Integration Depth

The trading skill consumes every monitoring output (price, volume, liquidity, risk assessment) and transforms it through a quantitative pipeline: momentum estimation, dynamic risk premium, Kelly sizing, 7-tier position review, decision composition with deduplication, and portfolio-level risk guards. Every TradeDecision carries a full audit trail including thesis markdown, source URLs, and Kelly fractions.