Is your crypto investing strategy more akin to,
say, rolling the dice at a casino? Or are you
genuinely running it like a calculated business?
Yeah, it's a really critical question, isn't
it? Especially remembering that whole YOLO and
dog coin Wild West phase. We're definitely talking
about moving past that now. Welcome to the Deep
Dive. Today, we're plunging into a system designed
to shift crypto investing away from hopeful guesswork
towards something much more data driven. Exactly.
And our mission for you is to explore how AI
artificial intelligence can help pick promising
coins, figure out the best trading strategies
for them, and then size your positions, all based
on some pretty sophisticated risk analysis. We've
got four main steps we're going to unpack. First,
how AI can help you choose your coins. Then second,
how to match those coins to the strategies that
really suit them. Third, using AI to actually
build a risk -adjusted portfolio. And finally,
the end game. automation, and crucially, the
right mindset for sticking with it. Okay, so
let's start right at the beginning. The big challenge
for many people in crypto still is picking coins
based on, well, vibes, memes. And maybe a dangerous
amount of hope. Oh, yeah. That leads to that
predictable cycle of pain, right? Yeah. Chasing
hype. And missing new opportunities because they're
always looking into the rearview mirror, you
know, at narratives that already played out.
Right. The real game changer, we think, is using
AI that has live Internet access. Think about
something like Grok pulling real time data from
X, formerly Twitter. It acts like a global trend
spotter. So using a standard AI without that
live feed. It's like using a history book to
predict tomorrow's weather. It's just outdated
information for a market that moves this fast.
OK, so this is where it gets really interesting.
You can prompt the AI, basically frame it as
a top tier crypto analyst. Tell it, focus on
market narratives, current trends. A really effective
prompt could be something simple like, considering
the latest market narratives and price action,
which coins deserve primary focus right now?
And when you did that recently, what kind of
analysis did it give back? It was fascinating,
actually. It gave a really balanced snapshot,
identified the core foundation, Bitcoin and Ethereum,
called them the non -negotiable bedrock, the
blue chips, basically. Makes sense. The essentials.
What else? Then it highlighted what you might
call the challengers, high momentum leaders.
Solana and BNB came up strong layer ones, thriving
ecosystems. And it even picked out a wild card,
a meme force Dogecoin. But importantly, it added
the caution. Treat carefully. High risk. High
reward. So it understands the different risk
profiles. What about those really cutting edge,
hot narrative play? Exactly. The growth bets.
AI tokens were big. Render, TAO, ASI. That intersection
of crypto and AI is a powerful story right now.
Definitely. And to pin plays. Depend stands for
decentralized physical infrastructure, basically
using crypto for real world stuff like Wi -Fi
or data storage. These narratives, these stories
are what capture market attention. Got it. So
that initial AI report gives a solid starting
list. But how do we go deeper? How do we know
if a narrative is just starting or if it's already
peaked? Well, you can use a follow up prompt.
Ask the AI to quantify the hype. Score the narrative
strength, maybe 1 to 10, based on conversation,
volume, sentiment, and list the main protagonist
coins for each. Oh, okay. That helps distinguish
real momentum from just noise. So, probing question
here. What's the core difference this AI approach
provides for actually selecting coins? It spots
current market stories, finding which coins truly
have momentum right now. Okay, that leads us
nicely into segment two. This is what I think
of as the money ball moment for crypto investing.
Yeah, this is where a lot of people trip up.
It really is. Maybe 95 % of investors fail here.
They find one strategy, maybe buy the dip and
just slab it onto every single coin they hold.
Blindly, yeah. It's like a baseball manager telling
every single player, pitcher included, use this
exact same swing. It doesn't work. Different
crypto assets have different... personalities
different behaviors absolutely so the fix is
to build an arsenal of different proven trading
strategies that you can test for the system we're
discussing two have been really key which ones
first the goshen channel strategy often used
on a daily chart it's a classic trend following
strategy designed to catch and ride those big
long market moves okay riding the wave exactly
and second the ichimoku cloud strategy maybe
on a four -hour chart This one's more about momentum.
It helps identify the trend direction, its strength,
key support, and resistance levels. Much more
granular. So a trend follower and a momentum
spotter. A good pairing. We've found it's a really
solid foundation. Now the engine that makes this
work, backtesting. We need to talk about that
process. Capricial step. You basically need a
good charting platform. Something like TradingView
is perfect, especially its strategy tester. Think
of it like a time machine for your investments.
That's a good way to put it. Seriously. It lets
you simulate how a strategy would have performed
on a coin over, say, the last five or seven years.
It condenses potentially a decade of trading
experience into, like, 30 seconds. That's pretty
powerful stuff. So the process looks like this.
You set up your lab, load those AI -picked coins
into a watch list on TradingView, apply one of
your strategy scripts, like Goshen or Ichimoku,
to the chart. Then you run the time machine,
configure the back to settings, hit go. It simulates
every single trade based on the strategy rules
over all that historical data. Then the important
part, capture the results. Right. You grab the
key performance data from the report and put
it into a simple spreadsheet. We call it dossier.
You log the metrics for each coin combined with
that specific strategy. And then you just repeat.
Systematically. For every coin on your list with
every strategy in your arsenal. And backtesting,
just to be clear, simply means simulating a strategy
on past data. Okay. So your spreadsheet starts
filling up with numbers. What do they actually
mean? What should people focus on? Good question.
You'll see net profit or ROI percent. That's
the bottom line, obviously. But honestly, it
can be misleading on its own. Because you need
to look at max drawdown percent. This one's maybe
the most important for risk management. It tells
you the single biggest loss streak your capital
experienced peak to trough a 60 percent drawdown.
That means at some point your portfolio could
have been cut in half. Okay, yeah, that's the
scary one. Understanding that helps manage the
emotional side, I imagine. Totally. It prepares
you. Then there's the Sharpe ratio. This is the
real money ball stat. It measures your profit
relative to the risk you took to get it. So higher
Sharpe is better. Generally, yes. A high Sharpe
ratio suggests smoother, more consistent returns
without those terrifying drops. Often much better
than just chasing the absolute highest profit
number. Interesting. And lastly, win rate percent.
how often your trades were profitable. It feels
good. It's an ego stat, but beware. Right. You
could have a high win rate with lots of tiny
wins, but if your few losses are huge, you're
still losing overall. Max drawdown, remember,
is that largest peak to trough decline. So probing
question from you this time. What's the biggest
mistake people make by ignoring max drawdown?
They risk emotional panic during inevitable deep
market corrections. Selling low, basically. Mid
-roll sponsor read. OK, so you've done the hard
work. You've got your coin list. You've backtested
strategies. You've meticulously gathered all
that performance data into your dossier. What
now? Well, this is where many people, even if
they get this far, make a common mistake. They
just allocate equal amounts of capital to each
coin strategy pair that looks decent. Right.
Just divide the money evenly. That feels like
amateur hour, doesn't it? It kind of is. A professional
approach focuses on building a portfolio based
on resuggested returns, not just raw profit potential.
And this is where AI comes back in, but maybe
a different type. Exactly. For this task, analyzing
the backtest data and deciding on allocations,
a powerful reasoning model like ChatGPT -4 or
specifically the newer O model seems ideal. It's
really good at sifting through data, understanding
nuance and making allocation decisions. So how
do you prompt it? What do you tell the AI to
do with all this spreadsheet data? You need to
be quite precise. You tell it something like,
OK, I'm going to upload several files containing
trading strategy backtest results. Please extract
all the data from each file and hold it in your
memory. You might have to upload in batches,
maybe 10 files at a time because of limits. OK,
practical tip there. And once all the data is
uploaded. Then you give it the core task, something
like review all the data thoroughly. For a target
investment of, say, $1 ,000, recommend the optimal
strategies and capital allocations. Prioritize
the Sortino ratio. Give slightly more value to
strategies with a higher number of trades, as
that indicates more statistical significance.
But above all, focus on reducing overall portfolio
risk while still capturing upside. OK, you mentioned
the Sortino ratio there. What is that, Quickie?
It's similar to the Sharpe ratio, measuring risk
-adjusted return, but it only penalizes downside
volatility, the bad kind of volatility. It doesn't
punish you for upside swings. Got it. So focusing
on downside protection, what did the AI recommend
when you ran this recently with a $1 ,000 example?
It was really instructive. The A .I. built a
portfolio that was a masterclass in balancing
risk and reward. The top allocations, the core
holdings, went to Solana using the Goshen strategy
that got 28 percent. And Bitcoin, also with Goshen,
got 21 percent. They consistently showed that
great balance, strong profits, but with moderate
manageable risk, according to the backtests.
Beat. OK, so about half the portfolio in those
core pairs. What else? identified a low risk
powerhouse a coin called hype using the ichimoku
strategy that got 18 it had solid returns but
crucially a really low max drawdown in the tests
only nine percent Very stable. Wow. 9 % drawdown
is impressive. Yeah. And Ethereum with Ichimoku
got 16%. That one showed a staggering 5 ,700
% profit over 7 .5 years in its back test. A
real consistent performer. Okay. But not the
biggest allocation despite the huge profit. Exactly.
Because the drawdown was higher, around 43 %
risk management. And finally, the lottery tickets,
the meme coins like Oliwugo, they got a small
combined slice, maybe 17 % total for a few of
them. Why include them at all if they're so volatile?
To manage that high volatility while still giving
you some exposure to their, you know, potential
explosive upside. Small bets on big possibilities.
So the AI isn't just a calculator. It's acting
like a strategic portfolio manager, making these
nuanced risk decisions in real time. That's the
game changer. It really is. Whoa. Imagine scaling
this level of risk reward calculation across
thousands of assets. The AI truly becomes a quant
analyst at your fingertips. Two sec silence.
So this isn't random allocation. It's rooted
in the math. Absolutely. The A .I.'s main goal
wasn't just picking the pairs with the highest
profit numbers. It was finding that sweet spot,
that optimal balance between risk and reward.
Like with Ethereum plus Ichimoku, massive 5 ,700
% profit potential. But that 43 % drawdown meant
it was a star player, yes, but too risky for
the largest chunk of capital. Precisely. And
then it saw HYPE plus Ichimoku, lower overall
profit maybe, but that incredibly low 9 % drawdown
made it a reliable defensive player. Strong returns
without the heart palpitations. That's why it
got a significant slice. Its risk -adjusted return,
its sharp ratio was excellent. And the mean coins.
Tiny allocation because the risk is huge, but
you still want a little exposure just in case
one takes off. You got it. That's the secret
sauce. Risk -adjusted position sizing. Position
sizing just means deciding how much money to
put into each specific trade or strategy. The
AI uses sharp, max drawdown, consistency, maybe
even current market vibes to decide. High drawdown
potential equals smaller position size. Moderate
returns, but low drawdown. Bigger position. Meme
coin. Tiny position for that upside potential.
And importantly, this isn't just theory. We've
seen these strategies deliver in the real world.
That HYPE strategy, for instance, was up 136
% recently based on these signals. OK, so clarifying
question. This AI doesn't just pick good coins
or good strategies. It specifically decides how
much capital to allocate to each specific pair.
Yes, precisely. Based on each coin strategy pairs
unique risk adjusted performance profile. All
right. You've done all the brain work. The AI
analyzed the market. The data is crunched. The
back testing is done. You have this mathematically
sound. risk -adjusted portfolio plan. Now, the
final hurdle, maybe the hardest one. Taking yourself
out of the equation, your own emotions. Yeah,
automate everything. Because your emotions, fear,
greed, FOMO, panic, they are absolutely your
worst enemy when it comes to executing a trading
plan. Couldn't agree more. Fear, scream, sell,
right at the bottom. Greed whispers, go all in
on something already up. One thousand percent.
FOMO, fear of missing out, makes you chase pumps
way too late. Panic makes you snatch tiny profits
or cut winners too soon. It's like the daily
market noise is the siren song from mythology,
right? Yeah. Luring your ship onto the rocks
of bad decisions. Great analogy. And automation
is how you strap yourself to the mast. You use
trading automation platforms, something like
Cigna, maybe that connect to your exchange account
like Binance or Coinbase. And they just execute
the plan. They execute the AI generated plan.
Two, four to seven. With cold, calculating, emotionless
precision, it takes your itchy trigger finger
completely out of the loop. Okay, that makes
sense. And this leads to what you call the zen
of systematic trading. It's a mindset shift,
isn't it? Absolutely crucial. You have to understand
this is not day trading. You're not trying to
scalp tiny profits minute by minute. Right. This
is systematic trend following. That means a strategy
designed to identify and follow major market
trends over weeks, maybe even months. Think like
a farmer, not a hunter. Is that the idea? Exactly.
A hunter chases every little movement, gets exhausted,
maybe gets small rewards. A farmer plants seeds
based on a plan, waters them, trusts the process,
and waits patiently for a big harvest. That requires
discipline, though. Trusting the math, ignoring
the daily news cycle, resisting that urge to
constantly check your portfolio balance. It's
tough. I have to admit, I still wrestle with
that farmer mindset myself sometimes. The urge
to just quickly check the portfolio. It's a real
battle, even when you know you shouldn't. It
takes practice. It really does. Trusting the
system. So once someone masters this two strategy
approach, maybe Goshen and Ichimoku, what's the
next level? You can build a multi -strategy portfolio.
Instead of just two strategies, you might test
three, four, five different types of strategies
on each coin. Well, you'd keep momentum strategies
for trending markets. Add mean reversion strategies
those trade when prices get stretched too far
from their average, expecting them to snap back.
Maybe add breakout strategies they trade when
price decisively breaks through a key level.
And you could even incorporate DCA dollar cost
averaging for steady long -term accumulation.
So diversifying not just by coin, but by strategy
type. That makes sense for handling different
market conditions, choppy, trending, exploding.
Precisely. It makes the whole system more robust.
Just a quick technical reminder for anyone trying
this, those AI models often have file upload
limits. Right. So if you're analyzing, say, 50
coin strategy pairs, you'll likely need to upload
the data spreadsheets and batches. And always,
always include a line in your prompt asking the
AI to confirm it's got all the data and is holding
it in memory before it does the final portfolio
allocation. Good point. Don't want it working
with incomplete info. Okay, final probing question
for you. What's the single most important habit
for success in this entire system? Trusting the
math and letting the automated system do its
job. Resisting the urge to meddle. Couldn't have
said it better. So the big picture here. The
crypto market is maturing. That Wild West phase
of pure gambling. It feels like it's fading.
Yeah. Success now is leaning much more towards
systematic data backed plans. Less guessing,
more calculating. And the really exciting part
is that AI makes this sophisticated, almost professional
-grade approach accessible to basically anyone.
You don't need that PhD in quant finance or a
team on Wall Street anymore. The tools are becoming
democratized. The choice really is yours now.
Are you going to keep gambling based on gut feelings
and emotion? Or are you going to start calculating
using math, data, and automation? We'd encourage
you, the lister, to think about how this kind
of AI -driven systematic approach could apply
elsewhere in your life too, beyond just crypto.
Where else could better data lead to better decisions?
And maybe a final thought to leave you with.
If AI can help us build a portfolio designed
to navigate something as volatile as crypto markets,
what other complex decisions, big or small, in
your own life might benefit from a calmer, more
data -driven approach, something to mull over?
We hope this deep dive gave you some valuable
insights. Join us next time. I'll use hero music.