Ultimate Poker Bluff Strategy

🎲 Ultimate Poker Bluff Strategy (Intraday Trading)
This strategy integrates multiple sophisticated concepts into a dynamic intraday trading system designed to identify and capitalize on short-term market inefficiencies (fake pumps and fakeouts).

The fake pump indicator can be found here:

📌 Core Concepts & Logic
This TradingView (Pine Script) strategy combines:
Poker principles:

• Pot Odds: Ensures a positive risk-reward ratio (at least 2:1).
  
• Bluff Detection: Identifies fake pumps or unnatural price movements using arbitrage detection methods relative to a benchmark (e.g., DXY).
  

Blackjack "Forbidden Strategy" principles:

• Dynamically adjusts the position size based on the profitability of recent trades, scaling up slightly after wins and scaling down after losses.
  

Devil’s Game (Risk Management):

• Implements strict capital protection rules by capping the maximum allowed position size, safeguarding your capital against rare and extreme market events.
  

⚙️ Detailed Explanation of Parameters
🎛 Strategy Inputs

• Basis Risk % per Trade (baseRiskPercent): The baseline percentage of capital risked per trade (default is 1%).
  
• TP ATR Multiplier (atrTPMultiplier = 3.0): Defines the profit target as a multiple of the ATR (Average True Range).
  
• SL ATR Multiplier (atrSLMultiplier = 0.5): Defines the stop-loss level as a multiple of ATR. A tight SL ensures high Reward/Risk.
  
• ATR Length (atrLength = 10): Period for ATR calculation to measure volatility.
  
• Max Position per Trade ($) (maxAbsolutePosition): Maximum allowed position size in USD to protect from catastrophic losses (default is $100,000).
  
• Fake Pump Scale (k) (k = 0.25): Sensitivity setting for detecting unusual price discrepancies (fake pumps).
  
• Benchmark Asset (benchmarkTicker = "DXY"): The asset used as a reference benchmark for arbitrage detection.
  

📈 Indicators & Calculations
Volatility Measurement (ATR)

• Uses the ATR indicator to set dynamic take-profit and stop-loss levels:
  
• Take Profit = current price + (ATR × 3)
  
• Stop Loss = current price − (ATR × 0.5)
  

Fake Pump Detection (Arbitrage Indicator)

• Measures deviations from expected asset price based on a constant relation with a benchmark (e.g., DXY).
  
• Generates EMAs (arb_ema_fast and arb_ema_slow) to detect abnormal short-term movements.
  
• Defines upper and lower thresholds (arb_threshold) to identify potential fake pumps or unsustainable price spikes.
  

Gamma Stability Check

• Ensures stable market conditions by confirming that the difference between fast and slow EMAs (arb_ema_fast and arb_ema_slow) remains small. Trades are entered only during stable conditions to avoid high volatility periods.
  

🔄 Dynamic Blackjack Position Sizing
Adjusts position sizing dynamically based on previous trade results:

• Profitable last trade → Increase risk slightly (up to a cap of 3%).
  
• Losing last trade → Reduce risk to 75% of base risk, enhancing capital protection.
  

🚨 Entry & Exit Logic
Long Entry Conditions:

• Fast EMA crosses above Slow EMA (bullish crossover).
  
• Market is stable (gamma_stable condition true).
  
• Previous candle indicated a downward fake pump (isFakePumpDown[1]).
  

Short Entry Conditions:

• Fast EMA crosses below Slow EMA (bearish crossover).
  
• Market is stable (gamma_stable condition true).
  
• Previous candle indicated an upward fake pump (isFakePumpUp[1]).
  
• Risk-Reward Validation: Only enters trades when the risk-reward ratio is at least 2:1.
  

🛡️ Capital Protection (Devil’s Game Principle)
Ensures no single trade exceeds the absolute maximum allowable position size, providing protection against rare, catastrophic events.

🖥️ Visual Plots for Analysis
Triangles: Visual indications of detected fake pumps:

• 🔻 Red down arrow: Potential fake upward spike.
  
• 🔺 Green up arrow: Potential fake downward spike.
  

🎯 Strategy Goals & Benefits

• Identifies high-probability intraday trades using a rigorous probabilistic framework inspired by professional gambling strategies.
  
• Limits exposure effectively, scaling position size strategically to capitalize on profitable sequences and minimize the impact of losing streaks.
  
• Ensures long-term capital growth with disciplined risk and reward management.
  

This is just an experiment on how to identify fake moves in the market which works especially in lower timeframe. This is not financial advice.