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SignalGuard: Transforming Risk Management in Crypto Trading

Everybody has told me it is super risky since I started with cryptos and crypto trading. It’s an unpredictable market driven by crazy volatility. And undeniably, there’s some truth in it. Not everybody can handle the crypto market, and proper crypto trading risk management isn’t easy at all.

However, I have been intrigued by the potential rewards since day one instead of being frightened by the risk.

Subsequently, I have continuously challenged myself by building strategies and frameworks that lower the risk as much as possible while simultaneously increasing the rewards.

Data & Strategies As Foundation To Limit The Risks Of Crypto Trades

When it comes to reducing risks, I’ve built tons of strategies and tools. Ultimately, most of them found their way into the Crypto OS platform. Today, the platform offers some fancy features to limit risks. Here is a high-level overview:

  1. We calculate high-quality trade signals to avoid emotion-based trading.
  2. We offer automated backtest results for all signals to filter out low-performing signals.
  3. We provide additional data, such as AI forecasts or patterns, to assess trade signals further.

Accordingly, we have a solid toolset every crypto trader can use to reduce risks.

However, I always had the feeling that this wasn’t enough. Something was missing.

SignalGuard — A New (and Automated) Way To Crypto Trading Risk Management

It took me a while, but when I finally put the pieces together, it was clear that I had found the missing part in terms of risk management.

I quickly came up with a title for this idea: SignalGuard. It perfectly describes what this feature is about: a guard that protects traders, a guard that throws out every trade signal that doesn’t meet the highest standards.

SafeGuard — The Basic Concept

Here’s the basic idea of the SignalGuard feature: Instead of relying on a trade signal, we incorporate various additional aspects to vet the signal further and filter out low-quality signals. As a result, every trade signal we show in Crypto OS gets a SafeGuard rating. This rating directly indicates the calculated risk of a trade signal.

How does it work in detail?

The SafeGuard feature examines a trade signal from different perspectives, assesses it, and assigns a score. As the table below shows, SafeGuard examines different aspects, such as chart patterns, AI forecasts, backtest results, etc.

EMA200Is the EMA200 aligned with the signal direction (price above EMA200 for bullish signals and below for bearish signals).Yes: 20
No: 0
AI ForecastDaily Timeframe
Is the signal aligned with the 7 Days AI Forecast?

1H & 15M Timeframe

Is the signal aligned with the 24H forecast?
Yes: 10
No: 0
AI Pattern ForecastOnly daily and hourly timeframe

Is the signal aligned with the AI pattern forecast?
Yes: 10
No: 0
Chart PatternDoes the chart indicate a pattern that support or contradicts the signal.Supporting Pattern: 15
Contradicting Pattern: -15
No pattern: 0
BacktestAssessment of the backtest results of the signal/token combination>80% Success rate: 20
>70%: Success rate: 10
>60%: Success rate: 5
Else: 0
Profit PotentialDoes the chart indicate a pattern that supports or contradicts the signal?4% (15M), 8% (1H), 15% (D): 15
2% (15M), 5% (1H), 10% (D): 10
1.5% (15M), 3% (1H), 5% (D): 5
Trend StrengthCheck whether the ADX is supporting a trade.ADX > 30: 10
ADX > 25: 5
else: 0
100 MAX

Of course, this approach doesn’t eliminate potential risks. However, it reduces them as much as possible by integrating as many aspects as possible.

How to use SignalGuard to manage crypto trading risks

Here’s the fun part: Using SignalGuard will be easier than easy. The feature will be directly integrated into Crypto OS. Accordingly, users can assess every trade signal with a simple mouse click.

In a second step, we will integrate SafeGuard into the bot feature. As a result, users can customize the minimum SafeGuard scoring. Accordingly, the bot will not be triggered to execute a trade if a trade signal does not meet the scoring requirements.

Further Improving Crypto Trading Bots

Talking about bots: Personally, I think that the SafeGuard feature will be a massive game-changer for our bot functionality. Based on discussions with users, I always felt that many prefer to manually assess signals instead of using bots.

SafeGuard can take over many of the manual tasks, so trading bots just became more appealing to me.

Ready To Push Your Crypto Trading Risk Management To The Next Level?

The most important question is when we plan to release the game-changing feature. As always, the answer is super soon!

We are currently in the final concept phase and have already started to code some parts of the feature. Additionally, the effort isn’t that high since the required data is already available.

Long story short: We plan to introduce the feature by the 12th of April 2024.

Ready to elevate? Let’s go!

And by the way, if you haven’t, you should check out Crypto OS!

Ben Walther
Ben Walther

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