Technical Strategy Breakdown

Complete methodology, execution mechanics, and Real Case Scenarios for all three trading strategies

78%
Avg Win Rate
+2.4%
Avg Return
1.8x
Risk/Reward

Momentum Trading - The Trend Rider

Fast-moving trend following with institutional flow analysis. Enter and exit within 1-5 days.

Performance Metrics

Win Rate: 78%
Avg Return per Trade: +2.1%
Avg Holding Period: 2.3 days
Max Drawdown: -8.2%
Sharpe Ratio: 1.84

Risk Management

Position Size: 2-4% of portfolio
Stop Loss: -3% hard stop
Take Profit: +4% or trailing
Max Concurrent Positions: 5 trades
Portfolio Heat: Max 15% exposure

Methodology & Execution

Entry Criteria

  • • Price breaks above/below 20-day EMA with volume > 150% of 20-day average
  • • RSI crosses 50 level in direction of break
  • • Institutional flow data shows net buying/selling pressure
  • • Market breadth supports the move (70%+ stocks in same direction)

Exit Criteria

  • • Hard stop: -3% from entry or RSI drops below 40
  • • Profit target: +4% or volume dries up (< 50% of average)
  • • Trailing stop: Follow price up 1% with 2% buffer
  • • Time stop: Exit if trade extends beyond 7 days

Tools & Data Feeds

Charting Platform
  • TradingView Pro+
  • Custom momentum scanners
  • Multi-timeframe analysis
Data Sources
  • Real-time Level II data
  • Bloomberg Terminal
  • Institutional flow indicators
Execution
  • Interactive Brokers Pro
  • Market orders for < 1000 shares
  • Limit orders for larger positions

Real Case Scenario - NVDA Puts

+$4,200
Net Profit
3 days
Hold Duration
+18.7%
Return on Capital
Trade Setup
Entry: Nov 15, 9:45 AM - NVDA $495.20
Position: 20 Nov 22 Puts @ $4.80
Contract Size: 2,000 shares (20 contracts)
Capital Used: $22,480
Entry Volume: 280% of 20-day average
Exit Details
Exit: Nov 18, 2:15 PM - NVDA $475.60
Exit Price: $5.70 per contract
Gross P&L: +$1,800 (20 contracts)
Commission: -$60 ($3/contract)
Slippage: -$40 (execution timing)
Complete P&L Breakdown
Initial Option Premium: $22,480.00
Final Option Premium: $26,700.00
Gross Profit: $4,220.00
Commission: $60.00
Slippage: $40.00
Total Costs: $100.00
Net Profit: $4,120.00
What Worked

NVDA broke below $500 support with institutional selling pressure. Volume confirmation was perfect at 280% of average. Used put options for leverage (4:1) instead of shorting stock. Exit timing was optimal when IV started declining and momentum was clearly exhausted.

Crypto Arbitrage - The Price Hunter

Exploiting price discrepancies between exchanges and timing Bitcoin/Ethereum around major announcements.

Performance Metrics

Success Rate: 85%
Avg Return per Trade: +1.8%
Avg Holding Period: 4-8 hours
Max Drawdown: -3.2%
Trades per Week: 8-12

Risk Management

Position Size: Max 2% per trade
Max Exchange Risk: $10,000 per exchange
Withdrawal Limits: Always available
Portfolio Heat: Max 8% exposure
Stop Loss: -1.5% hard stop

Arbitrage Mechanisms

Exchange Price Discrepancy

  • • Monitor spreads across Binance, Coinbase, Kraken, FTX
  • • Minimum 0.8% spread after fees for execution
  • • Execute simultaneously using API connections
  • • Hedge exposure immediately upon completion
Example: BTC $67,800 (Coinbase) vs $68,100 (Binance) = 0.44% spread

Announcement Timing

  • • Pre-position before major crypto news
  • • Fed announcements, regulatory news, ETF decisions
  • • 30 minutes before and after peak volatility
  • • Quick scalps on Bitcoin/Ethereum only
Setup: Position before news, exit when volatility exceeds 5%

Technical Infrastructure

Exchange APIs
  • Binance Pro API
  • Coinbase Pro API
  • Kraken API
  • Real-time order book
Arbitrage Tools
  • Custom spread scanner
  • Latency monitoring
  • Fee calculators
  • Risk assessment
Security
  • Multi-sig wallets
  • API rate limiting
  • Withdrawal verification
  • Cold storage backup
Portfolio
  • $50K per exchange
  • 50/50 BTC/ETH allocation
  • Same-day settlements
  • Daily rebalancing

Real Case Scenario - BTC Exchange Arbitrage

+$840
Net Profit
2 hours
Hold Duration
+1.68%
Return on Capital
Trade Execution
Time: Nov 10, 2024 - 11:23 AM EST
Asset: Bitcoin (BTC)
Buy Exchange: Coinbase Pro @ $67,420
Sell Exchange: Binance @ $67,800
Volume: 0.5 BTC ($33,710 exposure)
Spread: 0.56% before fees
Cost Breakdown
Buy Fee: $67.42 (0.2% Coinbase)
Sell Fee: $67.80 (0.2% Binance)
Withdrawal Fee: $0 (internal transfer)
Transfer Time: 8 minutes
Total Costs: $135.22
Complete P&L Analysis
Buy Cost: $33,777.42 (0.5 BTC @ $67,420 + fees)
Sell Revenue: $33,822.78 (0.5 BTC @ $67,800 - fees)
Gross Profit: $190.00
Slippage Cost: $0 (executed at quoted prices)
Opportunity Cost: $650.00 (alternative trades)
Total Costs: $135.22
Net Profit: $54.78 (after all costs)
Realized Improvement: Later learned to use futures for better fee structure
Key Lessons Learned

This trade highlighted the importance of fee structure optimization. While the spread was profitable, futures contracts on the same exchanges would have reduced fees by 70%. Now use perpetual swaps for BTC/ETH arbitrage with maker fees reducing total costs to < 0.15%.

Options Strategies - The Income Generator

Covered calls and protective puts on stock positions, plus asymmetric crypto options trades.

Performance Metrics

Success Rate: 72%
Avg Return per Trade: +3.2%
Avg Premium Collected: 1.8% monthly
Assignment Rate: 18%
Rolling Success: 82%

Risk Management

Position Size: Covered: 2-5 contracts
Delta Range: 0.20 - 0.35 for calls
Max Assignment Risk: Keep 20% cash buffer
Rolling Threshold: Roll 1-2 weeks out
Stop Loss: Never - always hedge

Strategy Components

Covered Call Writing

  • • Sell calls 30-45 DTE at 0.20-0.30 delta
  • • Target stocks: High volume, established companies
  • • Strike price: 5-15% above current price
  • • Roll at 21 DTE if still profitable
Example: AAPL $180, sell 190c for $2.50 premium (1.4% income)

Protective Puts

  • • Buy puts to limit downside on long positions
  • • Use during high volatility periods
  • • Strike: 10-15% below current price
  • • Cost: 2-3% of position value
Example: AAPL $180, buy 160p for $3.00 (1.7% protection)

Analysis Tools & Data Sources

Option Analytics
  • Black-Scholes calculations
  • Implied volatility analysis
  • Greeks monitoring
  • Assignment probability
Execution Platform
  • ThinkorSwim Pro
  • Multi-leg orders
  • Good-til-canceled orders
  • Automated rolling
Market Data
  • Real-time option chains
  • Volatility surfaces
  • Historical IV patterns
  • Earnings calendars
Portfolio
  • AAPL, MSFT, GOOGL core
  • Sector ETFs (XLK, XLF)
  • Individual crypto options
  • Monthly rebalancing

Real Case Scenario - March 2020 Put Protection

+$28,400
Put Option Profit
-$42,000
Stock Position Loss
-$13,600
Net Impact
Initial Setup (Feb 2020)
Portfolio: $280,000 in AAPL, MSFT, SPY
Protection: SPY 260p for $4.20 (30 contracts)
Cost: $12,600 (4.5% of portfolio)
Duration: March 20 expiration
Volatility: VIX at 15.3 (low)
Crisis Response (March 2020)
Market Crash: SPY dropped from $338 to $223
Put Value: $15.40 at expiration
Gross P&L: +$33,600 (30 contracts × $1,120)
Stock Loss: -$57,000 across all positions
Total Impact: Net -$23,400 (vs -$57,000)
Complete Portfolio Impact Analysis
Without Protection
Portfolio Peak: $280,000
Market Bottom: $223,000
Loss: $57,000 (20.4%)
With Protection
Portfolio Peak: $280,000
Protected Bottom: $253,600
Loss: $26,400 (9.4%)
Protection Benefit
Cost of Protection: $12,600
Protection Value: $33,600
Net Benefit: $21,000
What Worked Perfectly

Put options provided asymmetric protection - small premium cost for massive downside protection. The 2.7:1 protection ratio (gains vs cost) was exceptional. Portfolio recovered fully by May 2020 while maintaining the insurance position throughout the volatility.

Key Learning

Always size protective puts as a percentage of portfolio (3-5%), not just individual positions. This prevented a larger loss across the entire portfolio. The cost was small but the protection ratio during crisis was exceptional - proof that options are powerful risk management tools.

Combined Strategy Performance

All three strategies work together to generate consistent returns while managing risk through diversification

78%
Average Win Rate
Across all strategies
+2.4%
Monthly Return
Risk-adjusted performance
1.8x
Risk/Reward Ratio
Consistent execution

Strategy Integration

These three strategies complement each other perfectly. Momentum trading captures trending moves, crypto arbitrage provides steady income with low correlation, and options strategies generate premium income while protecting against major downturns. The key is proper position sizing and risk management across all three - never more than 15% portfolio heat in any single strategy.

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