When products and protocols are new they tend to trade a bit different Generally you can make decent money taking a known trade and applying it to something new Lets show you how /2

A "dirty carry" trade is going long the stuff that pays you to be long and short the stuff that pays you to be short... Hoping they balance out /3

This is a pretty mediocre stuff on the big coins, but out in supertrashcoinland it can be highly lucrative So if you find a dex that trades garbage, bonus points for it being new... you are probably on a winner. Here's how you figure out if you can, cos you can't backtest /4

Take a 3 day average of funding (you'd do a 2 or 1 day if you had good execution, but lets assume you suck because you probably do) Split those results into 10 chunks, (deciles) And measure against next day log returns /5

This is a plot from 3 months into @HyperliquidX operation You can see that the red dots of funding returns are pretty well behaved And the blue dots of pricing returns are sloppy /6

@HyperliquidX There will be some wrinkles here. You expect the left and right tail to behave differently, depending on the universe of the perp dex and the liquidity out in the tails (if trades can only be put on smol, proper traders won't bother) So how to do this in a practical sense? /7

@HyperliquidX Forget your bots On really shitty coins a spreadsheet and a mouse is most likely gonna outperform any bot unless its really good And you wanna get on these quickly anyway Checking twice a day and adjusting is fine /8

@HyperliquidX Practical stuff. Make a list of the top paying long coins (-ve funding) on your exchange and the top paying shorts This is my dashboard for HL /9

@HyperliquidX You trade either the top 3 or the top 5 depending on liquidity of the dex Equal weighted if they are all trashcoins, inverse vola weighted if you think you have a reason to get fancy (you don't) You hold 3 longs and hedge them against 3 shorts /10

@HyperliquidX Hopefully you aren't exposed too much to market moves (fingers crossed) Problems arise though You trades grow and shrink depending on whether they win or not You gotta stay balanced or you are taking a bet on market direction (don't take bets on direction) /11

@HyperliquidX Which runs you into your next problem (looking at you @maruushae ) Every time you touch a trade you bleed money Roughly expect to lose about 1/2 day of profits every time you touch it /12

@HyperliquidX @maruushae The technical "best way" of adjusting it is to allow it to float within a band of, say 90-110% and adjust when it reaches the edge, like this This is what we do in http://hypertrend.xyz /13

@HyperliquidX @maruushae But this is an area where the dodgy click tradoor has an advantage Lets say you are trading top3/bottom3 and a trade falls to #5 on the list Maybe its still good enough to keep there, given that it's gonna cost you a lot to swap it out for another equally dumb shitcoin /14

@HyperliquidX @maruushae The advantage is that you can get up and trading before your competition have their first teams meeting to start on the plan One scatter plot, exactly like this... and get clicking http://Lighter.xyz, quanto.perp, that new orderly dex... all fine prospects right now /15

@HyperliquidX @maruushae What you really want to do is trade more shit, since that won't work 100% of the time In http://hypertrend.xyz we do Trend Following, Cross-Sectional Momentum, Carry (funding rates) Mean Reversion /16

@HyperliquidX @maruushae And also... Relative Value Orderbook Aggression Lead-Lag behaviour Seasonality Flow modelling Some other stuff which we have to keep secret because it wouldn’t work long if we didn’t /17

@HyperliquidX @maruushae By blending a bunch of edges together in a soup we make something that works pretty gud most of the time That's the big picture of http://hypertrend.xyz in a tiny nutshell We should be good for somewhere between Sharpe 2 and Sharpe 3 depending on luck, capacity, etc /fin

@ScottPh77711570 You should a thread where you explain execution for these trades Having spoken with a few beginners it’s what they struggle with the most by far Understanding how to handle spread, liquidity, two legged traded etc

@ScottPh77711570 @pear_protocol has its built in funding aggregator for pair trading on Hyperliquid and its other engines, it might help tracking rates https://app.pear.garden/market...

@ScottPh77711570 So this bet is not directional because of the high correlation between all the shitcoins?

@D2HLC Correct re shitcoin correlation You are trying, and sometimes failing to be non-directional That’s why its called a “dirty” hedge Think of it as “near enough is good enough”

@ScottPh77711570 I like this. You smart - can we chat

@ScottPh77711570 Such a fun trade too when it works

@ScottPh77711570 Noob question: no hedging with spot? or is that obvious/implied?

@ScottPh77711570 I got brainwashed by the EMH at univ, thank you for unbrainwashing me

@ScottPh77711570 The highest risk here is the boom or bust of any of these tokens vs shitcoin market in general?

@ScottPh77711570 Thanks Scott. This thread is really helpful.

@Cyespx James and I do this everywhere we can. Its the basic bitch of trades

@ScottPh77711570 Remember your Thailand tips were goated

@ScottPh77711570 Interesting . I’m trying to learn more sophisticated strategies like this. Out of curiosity, what type of size makes this worthwhile or is it irrelevant?

@ScottPh77711570 @grok can you walk me through how to do the point and click traidng hes talking about