| 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. |
trading-strategy
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
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
