Sim Score
Introduction: The Sim Score is a performance metric similar to the Sharpe Ratio in that it characterizes risk-adjusted returns. What differentiates the Sim Score from the Sharpe Ratio is that the formula has a component that calibrates the score based on relative volume.
Description: Scores generally take on a value between -4 and 4. Scores are provided for XBTUSD and a basket of alt/BTC pairs including ()/BTC. The scores together can provide insight into the relation between alt/BTC pairs and XBTUSD. When alt/BTC scores are relatively similar (“bunching”), these pairs are considered to be highly correlated. Using any preferred method to determine trend, when bunching occurs, it is recommended to take alt/BTC positions all in the same direction. When all scores are falling, this would suggest that players are exiting crypto markets to fiat. Other useful information about the Sim Score is provided below:
Reliable divergences: While a popular signal to help inform trades, divergences alone are not reliable, and even when used to provide confirmation, they are quickly invalidated in trending markets. Sim Score divergences, on the other hand, have more predictive power of trend exhaustion.
Directional bias: When a value > 4 or < -4 prints for the XBT score, circles are plotted which is a strong indication that the trend is moving in that direction. A word of caution — note where the alt/BTC scores are relative to XBTUSD score. If they are bunched together (moving in unison suggesting significant correlation between alt/BTC pairs) and have values inversely proportional to the XBT score, the chance of a countertrend move increases.
Effective on low timeframes: Provided below are a few setups that can be employed.
Divergences: Effective on all timeframes.
Countertrend setups: Requires bunching of alt/BTC scores that have values inversely proportional to the XBT score.
Zero-value cross events: Requires bunching of alt/BTC scores and an XBT-alt/BTC crossover event at the midline (zero-value).
Midline retest: For a bullish retest, requires alt/BTC scores to be negative and the XBT score to be positive. Both plots approach the midline and are rejected signaling continuation.
The utility in the Sim Score extends beyond the primer and examples above. A deeper look into the edge it can provide is available to subscribers. If interested in adding it to your trading toolkit, lifetime permissions for the Sim Score can be purchased for a modest fee of .015 BTC. As always, feel free to send me a DM with any questions you have about the Sim Score. Thank you for your interest in my work.
Happy trades,
Sim
Description: Scores generally take on a value between -4 and 4. Scores are provided for XBTUSD and a basket of alt/BTC pairs including ()/BTC. The scores together can provide insight into the relation between alt/BTC pairs and XBTUSD. When alt/BTC scores are relatively similar (“bunching”), these pairs are considered to be highly correlated. Using any preferred method to determine trend, when bunching occurs, it is recommended to take alt/BTC positions all in the same direction. When all scores are falling, this would suggest that players are exiting crypto markets to fiat. Other useful information about the Sim Score is provided below:
Reliable divergences: While a popular signal to help inform trades, divergences alone are not reliable, and even when used to provide confirmation, they are quickly invalidated in trending markets. Sim Score divergences, on the other hand, have more predictive power of trend exhaustion.
Directional bias: When a value > 4 or < -4 prints for the XBT score, circles are plotted which is a strong indication that the trend is moving in that direction. A word of caution — note where the alt/BTC scores are relative to XBTUSD score. If they are bunched together (moving in unison suggesting significant correlation between alt/BTC pairs) and have values inversely proportional to the XBT score, the chance of a countertrend move increases.
Effective on low timeframes: Provided below are a few setups that can be employed.
Divergences: Effective on all timeframes.
Countertrend setups: Requires bunching of alt/BTC scores that have values inversely proportional to the XBT score.
Zero-value cross events: Requires bunching of alt/BTC scores and an XBT-alt/BTC crossover event at the midline (zero-value).
Midline retest: For a bullish retest, requires alt/BTC scores to be negative and the XBT score to be positive. Both plots approach the midline and are rejected signaling continuation.
The utility in the Sim Score extends beyond the primer and examples above. A deeper look into the edge it can provide is available to subscribers. If interested in adding it to your trading toolkit, lifetime permissions for the Sim Score can be purchased for a modest fee of .015 BTC. As always, feel free to send me a DM with any questions you have about the Sim Score. Thank you for your interest in my work.
Happy trades,
Sim