Shorting meme coin strategy in Python makes 86% — Transcript

Full transcript

1. 0:00Hey guys, it's so today we're going to
2. 0:01write a Python strategy to trade the
3. 0:04Trump memecoin. Now, I may not be a
4. 0:06political person, but when it comes to
5. 0:07trading, Mr. Trump's coin is a great
6. 0:10opportunity for shorting. And that's
7. 0:12exactly what we're going to do today.
8. 0:13Now, first I will show you the entry and
9. 0:15exit rules of the strategy on Trading
10. 0:16View and then we will use GPT to convert
11. 0:19those rules into Python code so we can
12. 0:21run some actual back test on them. Now,
13. 0:23before I continue, I got to say I am not
14. 0:25a financial adviser and this video is a
15. 0:27tutorial and you should always do your
16. 0:29own research before trading. Now, with
17. 0:30all that out of the way, let's get right
18. 0:32into the video.
19. 0:35And the first indicator that we're going
20. 0:37to use is a simple EMA crossover. So,
21. 0:40let's add two moving average exponential
22. 0:42and then change the time frame from 9
23. 0:44into 12. And let's do it one more time.
24. 0:47And this time, let's change it into 26.
25. 0:50And I'm also going to change the size of
26. 0:52it to be slightly thicker and in another
27. 0:55color. All right. So the first entry
28. 0:56rule is very simple. We want this blue
29. 0:59line here which is our fast EMA to be
30. 1:01below the purple one. So this would have
31. 1:03been a valid entry point for us. The
32. 1:05next indicator is going to be the RSI
33. 1:07which is the most famous oscillator and
34. 1:09I'm sure you already know it. But let's
35. 1:11add it to our chart. All right. So I'm
36. 1:13going to define a threshold at the value
37. 1:16of 55. So that would be approximately
38. 1:19here. And I want the value of the RSI,
39. 1:22which is this purple line here. It
40. 1:24should be above this threshold. So let's
41. 1:26just edit this so you guys can see it
42. 1:28better. Let's remove this moving
43. 1:29average. And also, let's see if I can
44. 1:33change the threshold. I should get
45. 1:35exactly what I wanted. Let's also remove
46. 1:37this and this. Great. All right. So I
47. 1:40can also remove my own line and just use
48. 1:42this. All right. So the second inter
49. 1:44rule is that the RSI value must be above
50. 1:47this threshold value which is here. So
51. 1:50all these areas would have been a valid
52. 1:52choice except that if you notice the EMA
53. 1:56crossover wasn't happening here because
54. 1:57of that we would not have gone short
55. 1:59here. Now the next indicator is
56. 2:01something that I always use in order to
57. 2:04filter out the ranging markets because
58. 2:06this is supposed to be a trend following
59. 2:07strategy. So we don't want to take any
60. 2:09trades if we are in a range and that is
61. 2:11the ADX. So let's add it.
62. 2:15And the threshold for it is going to be
63. 2:1720. So let's add this here. So basically
64. 2:19anywhere where the ADX value is above
65. 2:21this threshold would be valid for us. So
66. 2:24for example in here where the crossover
67. 2:26was happening would have been valid.
68. 2:27Although in this case it wasn't because
69. 2:29the RSI was actually below the number
70. 2:3255. And believe it or not that's it.
71. 2:34That's all the entry rule that is the
72. 2:36strategy. It is very very simple. Now I
73. 2:39looked up and I found one point in time
74. 2:41where the all the entry rules would have
75. 2:43been true and that is here. So you see
76. 2:45not only the blue line or our fast EMA
77. 2:48line is below the purple line or the
78. 2:50slow moving average but also the RSI
79. 2:52value is above our threshold and the
80. 2:55value of the ADX is also above the
81. 2:57threshold. So this would have been one
82. 2:59area where we went short. You see and it
83. 3:02would have been a perfect short. But
84. 3:04this is our entry rule. What about the
85. 3:06exit rule? For exiting the trade, I
86. 3:08would have simply used something like
87. 3:10the ATR. So, let's add it to our chart.
88. 3:12Average true range. Now, this indicator
89. 3:14is not like an oscillator or a line on
90. 3:17the chart. It gives us a value, right?
91. 3:20So, you can see the value of it is
92. 3:21changing. And at this point, it would
93. 3:23have been 0.069.
94. 3:25And we can simply add that to our chart.
95. 3:27So for instance, what I want here is
96. 3:30this plus 1.5 of that value for our stop
97. 3:33loss, which would have been
98. 3:34approximately here. And then for the
99. 3:36takerit, we use 2.5 times of that. So
100. 3:39that would have been approximately here.
101. 3:42So if this was our entry, the stop loss
102. 3:45would have been here and the take profit
103. 3:47would have been here. And as you can
104. 3:48see, it was truly hit. And as for
105. 3:51position sizing, I want to risk 1.5% of
106. 3:54my capital per each single trade. And
107. 3:56that means if this stop loss was hit, I
108. 3:59would have lost only 1.5% of my total
109. 4:01capital. For example, if I was trading
110. 4:03with $10,000, I would have lost $150.
111. 4:07And that's it. Now that we have both the
112. 4:08entry and exit rules of the strategy, we
113. 4:11can go to GPTs to convert these rules
114. 4:13into Python code. Now to use GPT for
115. 4:15this purpose, I have made my own
116. 4:17specific instructions for algo trading
117. 4:19with Python. And to use it, you have two
118. 4:21options. One is to use the cloud version
119. 4:22that I made. It is called JSGPT and it's
120. 4:25free to get started or you can self-host
121. 4:27your own version which I described how
122. 4:29to do in this video. So if that's what
123. 4:32you want to do, for example, if you want
124. 4:33to use your own API keys to don't pay me
125. 4:36anything or if you have some privacy
126. 4:38concerns, then go with this video and
127. 4:40self-hosted yourself. Now for this
128. 4:41video, I'm going to use Jess GPT because
129. 4:43it's just easy for me to get started.
130. 4:44Now in Jess GPT, we have options to
131. 4:46choose whichever LL model that we want.
132. 4:49I'm going to go with GPT5 mini because
133. 4:51it's extremely cheap and I find its
134. 4:53results to be reliable enough. So, let's
135. 4:55choose that. And as for the prompt, I
136. 4:57wrote this. Write a strategy that only
137. 4:59shorts when the fast EMA 12 is below the
138. 5:02slow EMA 26 and the RSI is above 55.
139. 5:06Also, make sure ADX is above 20. Enter
140. 5:08short positions at market price. Risk
141. 5:101.5% of the account per trade. Set a
142. 5:13stop loss at entry price plus 1.5 * ATR.
143. 5:16Take profit at entry price minus 2.5
144. 5:19times the ATR. Don't do any long
145. 5:21positions, just short. Let's hit enter.
146. 5:25All right. So, it brought it and it
147. 5:26named it short EMA RSI ADX. Now, I don't
148. 5:30love this name. Right. Inside Jess's
149. 5:31dashboard, let's generate a new
150. 5:33strategy. And I'm going to call it Trump
151. 5:38short. And then inside my cursor editor,
152. 5:40or you can use VS Code, which is
153. 5:41completely free. It doesn't really
154. 5:43matter. So, let's look it up. And there
155. 5:45we go. This is the generated code for
156. 5:48us. But let's go back to Jess GPT and
157. 5:50copy this whole thing and paste it here.
158. 5:52Now it should also change the name of
159. 5:54this to also be Trump short. Now let's
160. 5:58read it. So when it comes to shoot long,
161. 6:00it is returning false. So it because
162. 6:02this is short only, we don't want it
163. 6:03long at all. And then it defined a new
164. 6:05property for the MA fast inside it. It
165. 6:08defined the period as 12. So this is
166. 6:10perfectly correct. And it is simply
167. 6:11returning TA. EMA, which is the correct
168. 6:13syntax for Jesse to use a moving average
169. 6:16exponential. And then it did the same
170. 6:18for the EMA slope except with a period
171. 6:20of 26. And then for the RSI, we simply
172. 6:23said return TA. RSI and then the current
173. 6:26candles. And we didn't even specify any
174. 6:28period for it. But if we would have like
175. 6:30it would have been 14, which is the
176. 6:32default value as you can see here. Now
177. 6:35for the ADX, we did the same and then
178. 6:38the ATR. All right. So perfect. Now,
179. 6:40when it comes to shoot short, which is
180. 6:42where we define the entry rules of the
181. 6:44strategy, we're saying the EMA fast
182. 6:47should be below EMA slow. So, in other
183. 6:49words, a crossover should happen and the
184. 6:51RSI value must be above 55 and the ADX
185. 6:54must be above 20. So, this is perfectly
186. 6:57correct. And then once all the inter
187. 6:59rules are met, we want to do the
188. 7:00position sizing, right? We want to take
189. 7:02the actual trade and that's where we use
190. 7:03the go short function of Jesse. So, we
191. 7:05say the entry is the current price sell
192. 7:08price, which would be a market order.
193. 7:09Now, by the way, Jesse is smart enough
194. 7:11to detect the type of order that you
195. 7:14want to use. So, when you say I want to
196. 7:15use the current price, it knows what you
197. 7:17want is a market order. And then you
198. 7:19define the suborder. So, the entry plus
199. 7:231.5 times of the current ATR which we
200. 7:26defined above here, right? So, this is
201. 7:29also correct. And then we're saying the
202. 7:31quantity is utilisk the quantity utility
203. 7:35function of Jesse which basically takes
204. 7:37an percentage number that you want to
205. 7:39risk per each trade and also your
206. 7:41capital. So for the capital we're using
207. 7:42the available margin. I could have also
208. 7:45used something like the balance but the
209. 7:47available margin is actually better. And
210. 7:49then the percentage we want to risk is
211. 7:511.5. And then it is passing the entry
212. 7:54the stop price and then the fee of the
213. 7:56current exchange that we're trading. And
214. 7:58then it is saying if the quantity is
215. 8:00above zero. Now in some strategies this
216. 8:03is helpful to do this because sometimes
217. 8:06your quantity is going to be zero and
218. 8:08that's not a good thing. But I wouldn't
219. 8:11do this personally because if that's the
220. 8:12case there is something wrong in my
221. 8:14calculations and I want to know about
222. 8:16that is and I want to actually see an
223. 8:18error. So I'm going to remove that. Now
224. 8:21everything else is fine. Now to submit
225. 8:22the actual sell order we simply say
226. 8:25selfell equals quantity and then the
227. 8:28entry price. So very simple and then
228. 8:30once the position is open that's when we
229. 8:32want to submit the takerit and a stop
230. 8:34loss right so for that we use the unopen
231. 8:37position method of Jesse and in it we're
232. 8:39saying if is a short position now
233. 8:40because this strategy is short only this
234. 8:42will always be true right so let's just
235. 8:44remove it to make it simpler and we're
236. 8:46saying the SL or the stops price is
237. 8:49going to be the entry price of the
238. 8:50current position which we can easily
239. 8:52take by saying position entry price plus
240. 8:561.5 times of the current ATR So this is
241. 8:59basically the same thing that we did
242. 9:00here. And then we're saying the TP or
243. 9:02the takerit equals self.position
244. 9:05enterprise minus 2.5 times of the
245. 9:08current ATR. So you see if we win we win
246. 9:10bigger than when we lose. So in other
247. 9:12words, even if we get a win rate of 50%,
248. 9:15we're going to be in a profit and then
249. 9:17we submit the actual subl. So we're
250. 9:19saying the quantity is going to be the
251. 9:20quantity of the current position and
252. 9:22then the price is going to be the SL
253. 9:25which we defined here. And we do the
254. 9:26same for the take profit. And it also
255. 9:28said the should cancel entry should
256. 9:30return true. That this function isn't
257. 9:32really needed. It's only needed if you
258. 9:34were using a limit or a stop order in
259. 9:36order to enter the position. But we're
260. 9:38using a market order, so we don't need
261. 9:40this. I can even delete it. And it also
262. 9:42defined the watch list, which is helpful
263. 9:44if you are live trading this strategy.
264. 9:46So I could just delete it for now or
265. 9:48leave it here. It doesn't really matter.
266. 9:49Let's just comment it. And let's go back
267. 9:51to Jess's dashboard and go to the back
268. 9:53testing page. Let's find the strategy.
269. 9:56So, Trump short and set the time frame
270. 9:59to hourly and the route to Trump UCT.
271. 10:03The exchange is minus perial futures.
272. 10:05The duration is the third month of 2025
273. 10:08which is basically when the Trump coin
274. 10:09came out or a little bit after that
275. 10:11until this month which is September and
276. 10:14then I enabled fast mode and the
277. 10:17benchmark feature. So, let's go and give
278. 10:19this a run. Now, it's saying that the
279. 10:22strategy is not valid. All right. So you
280. 10:24see this is happening because we have
281. 10:26the shoot long method but we don't have
282. 10:28the golong method. So let's say go long
283. 10:32and even though we don't want to do
284. 10:35anything we still need to define it. So
285. 10:37let's just write the word pass in it and
286. 10:39I believe it should work. Now I want to
287. 10:42quickly remind you guys about Apex which
288. 10:44is my favorite deck allowing you to
289. 10:46trade perpetuals without providing any
290. 10:48KYC while keeping the custody of your
291. 10:50funds. If you sign up via my link, you
292. 10:52will get 25% trading fee discounts and
293. 10:55you will also be supporting my work. All
294. 10:56right, so it is and we made 22%. The
295. 11:00draw down is minus 4% which is extremely
296. 11:02low. The mirror is 51%. So this is
297. 11:05pretty cool. The sharp is 2.55. This is
298. 11:07really good. But because the max draw
299. 11:09value is very low, it allows me to
300. 11:11easily add to the size of my position.
301. 11:13So what if I go here and add to the size
302. 11:17of the position to be like four times of
303. 11:20this and run it again. Now you see I'm
304. 11:23making more money but now the max is
305. 11:25-6%.
306. 11:26But I made 107% instead of like 22%.
307. 11:30Which is significantly higher. The mur
308. 11:33is of course the same number and the
309. 11:34sharp should also be the same which it
310. 11:36is and the cam ratio is also really
311. 11:38good. It's 19 which is amazing. The
312. 11:41average holding time is 16 hours. It's a
313. 11:43bit too high, but it's okay. Oh, but I
314. 11:46made one mistake. We're not paying
315. 11:47trading fees. I guess I have disabled it
316. 11:50by mistake. So, let's bring this back to
317. 11:53what it is on Binance. It's actually a
318. 11:56bit lower on Binance. I believe this is
319. 11:58the number, but I'm going to leave it at
320. 11:59this to also consider the slippage. So,
321. 12:03let's run it one more time. And now,
322. 12:05this is the value that we're getting.
323. 12:06So, the P&L is slightly lower. The max
324. 12:09is minus 70%. So this is still good
325. 12:11enough for me and I'm going to accept
326. 12:14that. The sharp is still above two which
327. 12:15is amazing. Now let me show you one cool
328. 12:17feature of Jesse. If I enable the
329. 12:19generate interactive charts option and
330. 12:22run this one more time
331. 12:25and now we have this view charts option
332. 12:27here which we can see all the trades
333. 12:30that it took. So for instance in here it
334. 12:32took the short trade and then it closed
335. 12:34it here. Again, it shorted here, but it
336. 12:37closed here at the stop- loss. So, this
337. 12:39was a losing one. We can also see the
338. 12:41list of them here. And if I click here,
339. 12:43it will show me the trade that I took.
340. 12:45So, it opened it here and closed it
341. 12:47here. Again, this was a winning one.
342. 12:49Now, let's take a look at the losing
343. 12:51one. So, in here, you see it opened it,
344. 12:54but it closed it at the stops in here.
345. 12:58So, this is pretty cool. And if I open
346. 13:00it, I can also see the actual orders
347. 13:02that it took. And here I can see the
348. 13:05details of it like the actual entry and
349. 13:07exit price, the quantity, the P&L that
350. 13:10we made or lost and the trading fees
351. 13:11that we paid and everything really. So
352. 13:14that's really cool. Next, we can do
353. 13:16something really cool. We can go and
354. 13:17copy the code of the strategy. Go to
355. 13:19JGPT and say, hey, this is my code.
356. 13:24Add charts to it. All right. Now, let's
357. 13:28copy the whole thing. Now we define an
358. 13:30after method and inside it it said add
359. 13:32line to candle chart which is the
360. 13:34correct syntax in JC to add the
361. 13:37indicator values into the chart. So we
362. 13:40added the values of the moving average.
363. 13:42We also gave it a color and a name and
364. 13:45it did the same thing for the RSI but we
365. 13:48don't need these. So let's also remove
366. 13:50those. Now by the way I believe cloth
367. 13:52set was doing a better job than the GPT5
368. 13:54mini for this because this wrote some
369. 13:57extra stuff that I'm not happy with. It
370. 13:59also define the ADX and the ATR which we
371. 14:02don't need. We also don't need these. So
372. 14:06let's remove them. And now if I go back
373. 14:08and rerun this one more time and go to
374. 14:11the chart, you see now we have some
375. 14:14helpful lines. So for example, let's
376. 14:16find this trade. You see where it took
377. 14:18this. We went short here. The EMA 12,
378. 14:22which in here is the orange line, is
379. 14:24indeed below the blue line, which is the
380. 14:26EMA 26. and the value of the RSI was
381. 14:30indeed above the threshold and the value
382. 14:32of the ADX was also above the threshold.
383. 14:35So this way we can validate the entry
384. 14:37rules of the strategy or let's say
385. 14:39there's something fishy going on. Let's
386. 14:41say you are really suspicious of this
387. 14:43loss for whatever reason and you want to
388. 14:46see like what was the values right like
389. 14:49was the value of the RSI indeed
390. 14:51something that it should have taken the
391. 14:53trade or not. So, this is really helpful
392. 14:56in order to add some more filters to the
393. 14:58strategy or to fine-tune it. But be
394. 15:00careful when you're doing this to not
395. 15:02overfeit the strategy. Now, next, before
396. 15:04I leave you guys, you probably know that
397. 15:06in one of my previous videos, I released
398. 15:09a script to run Monte Carlo simulations.
399. 15:11So, let's also run that for this
400. 15:14strategy. So, let's go to that script
401. 15:16and let's give it the name of the
402. 15:19strategy. So, Trump short and the time
403. 15:21frame is hourly and the symbol is Trump
404. 15:24uses T and it has no data out. And for
405. 15:27the simulation config, let's use the
406. 15:30number 200. And this is the start and
407. 15:33ending date of the back test. And I'm
408. 15:35also going to leave all these three
409. 15:37true. And now, if I open my terminal, I
410. 15:39simply say Python test Monte Carlo.
411. 15:44Now I'm getting some errors but it
412. 15:46doesn't matter because at the end of the
413. 15:48day it executed 136 of them successfully
414. 15:52and that is enough for me and there we
415. 15:54go. So we are getting some interesting
416. 15:56values. So let's begin with this one
417. 15:58which shows me the equity curve path
418. 16:00that the strategy took not just for the
419. 16:03original back test which is this green
420. 16:04line here but also for the simulations
421. 16:07which are these blue lines here. As you
422. 16:09can see, there were many cases where the
423. 16:12max rodon could have been worse than
424. 16:14what we actually took. So what this is
425. 16:16telling me is that even though the max
426. 16:18rodon of the original back test is -7%
427. 16:21in let's say the median of the data it
428. 16:24is - 33%.
429. 16:26So basically if let's say I was just
430. 16:30okay with minus 17% maxon I probably
431. 16:33wouldn't want to go live with this. I
432. 16:35want to reduce the size of my position.
433. 16:37So remember when we did this we
434. 16:40multiplied our quantity by four. So if I
435. 16:43was only okay with let's say minus 15 or
436. 16:4517%. I should have come here and
437. 16:48multiplied it by two instead of four. So
438. 16:50but in reality I am okay with minus 30%.
439. 16:53So I'm going to leave it at this. Now we
440. 16:55also have another type of Monte Carlo
441. 16:57Jesse and that is to shuffle the
442. 16:59candles. So we add some noise or things
443. 17:02like that. In other words, you can say
444. 17:03we want to stress test the result of
445. 17:05this strategy so that we don't just rely
446. 17:08on the back test. So if I do that, I get
447. 17:10this table here and you see the sharp of
448. 17:13the original back test is 2.21, but on
449. 17:16the median it is 0.61, which isn't
450. 17:18really great, but it's still positive.
451. 17:20So yeah, I could take this strategy
452. 17:22live. But also the sharp of the original
453. 17:25is less than the best 5%. So in the best
454. 17:285% it was 2.92, but this one is giving
455. 17:31me 2.21. 21 which is lower than this. So
456. 17:34that is another sign that it is good
457. 17:36enough for me to go live. Now of course
458. 17:38this is all just my opinion like how you
459. 17:40read the Monteol simulations is a bit
460. 17:43personal. So I know a lot of you will
461. 17:46disagree with me and I'm going to leave
462. 17:47it with you. But to me I consider this
463. 17:50good enough to go live. And now let's
464. 17:52take a look at the chart. So you see
465. 17:54this is the original back test. These
466. 17:56are the values that would have been even
467. 17:58better. So you would have made more
468. 18:00money. And these are the values that we
469. 18:02would have done worse. Now before I
470. 18:04leave you, I want to show you one thing.
471. 18:06Now you see this orange line here. It is
472. 18:08the result of the Trump coin itself. So
473. 18:10what if we just bought and hold it,
474. 18:12right? So this is that and except in
475. 18:15here it was almost always going down. So
476. 18:17what I want to say is this that this
477. 18:19strategy is clearly working. But that
478. 18:22may be just because the coin's price
479. 18:25have been going down, right? I mean sure
480. 18:27in here when the price had a surge we
481. 18:30didn't lose that much right so the
482. 18:32strategy was considering this scenario
483. 18:34and that is good but if let's say
484. 18:36tomorrow there's going to be huge
485. 18:38uptrend for this coin you don't want to
486. 18:40keep trading it but on the other hand
487. 18:42what I believe would happen is that
488. 18:44after this bull market which we are in
489. 18:46right now is over we're going to have a
490. 18:48bearish market and a ranging market and
491. 18:50what I believe will happen for a meme
492. 18:52coin like this one which is completely
493. 18:54worthless is that the price of it should
494. 18:56continue to go down. But because this is
495. 18:58Mr. Trump's coin and many people want to
496. 19:01suck up to him or whatever, this coin
497. 19:03was added to all the major exchanges. So
498. 19:06that means if you want to trade this,
499. 19:08there's going to be liquidity for it.
500. 19:09And that's all that we care about,
501. 19:11right? If there's enough liquidity and
502. 19:13there's a pattern we can take advantage
503. 19:14of, we're going to trade it. And it
504. 19:16doesn't necessarily have to be a long
505. 19:18position, it could be shorting
506. 19:19positions. And that's exactly what we're
507. 19:21doing here. Now I am going to add the
508. 19:23result of the strategy to our strategy
509. 19:25index where you can see the result of it
510. 19:27for other symbols, time frames or time
511. 19:29periods. But in this case it doesn't
512. 19:32really matter because this was supposed
513. 19:34to short memecoin. So the result of it
514. 19:36for BTC or ETH definitely won't matter
515. 19:38and it won't be good for sure. And our
516. 19:41strategy index page doesn't support meme
517. 19:43coins yet. But still I am going to add
518. 19:46it here. So if you guys want to just
519. 19:48copy the code, you can do that very
520. 19:50easily here. And if you want to check
521. 19:51out my other strategies, make sure to do
522. 19:54so and use them as you like. And the
523. 19:56giveaways are back. So, a random
524. 19:58subscriber who likes the video and post
525. 20:00a comment is going to win 1 million bunk
526. 20:02token. The last video that I did was a
527. 20:04release video and it wasn't supposed to
528. 20:05have a giveaway. But the guys who did
529. 20:07comment are the ones who always support
530. 20:09me no matter what. And I really
531. 20:11appreciate you guys. So, I'm going to
532. 20:12pick a winner anyways.
533. 20:14And the winner is this user. and I'm
534. 20:16really glad that it's him because he's
535. 20:18been one of the most supportive members
536. 20:20of our community. Thank you so much for
537. 20:22your comment. Please reach out to me so
538. 20:23I can send you your tokens. Thank you so
539. 20:25much for watching. I'll see you in the
540. 20:27next one.
541. 20:28[Music]
542. 20:31[Applause]
543. 20:32[Music]