Scarb Glossary
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Tested — does not work

A second signal in a row as confirmation of the first

The idea: do not trade the first signal, wait for a second one on the same coin — it confirms the move is real. When we tested it, the second signal had a lower share of trades that finished up than the first.

Why it sounded right

Waiting for confirmation is the most respected habit in trading, and it usually does cut down the number of false entries. Here it looked especially fitting. The first signal says: the coin has gone vertical. The second says: it has added as much again on top of what triggered the first. That is no longer a spike, that is acceleration.

The mechanism behind it is simple and convincing. A single spike can be anything — a thin book, one big order, a random stop hunt. But if the coin has covered a second stretch like that, the buying is still being carried, everyone standing against it has been run over, and the move has reached the state where it can no longer end quietly. And the tighter the spring, the harder the snap back. Straight conclusion: sell the second signal, not the first, and sell with more size.

Watching it by eye confirmed this. On several coins the picture was exactly that: the first signal still ran further and a short position hurt, while after the second one the coin folded almost immediately. And the first measurement, on a short summer window, gave precisely that: the second signal looked twice as good as the first, and its share of trades that finished up was high. It sounded like a closed question.

How we tested it

We widened the window and recounted the two kinds of signal separately over many months on one exchange. What mattered most here was not the sample size but the order of operations: the two half-years were counted separately before anyone looked at the combined result. The point is that a merged pile hides both a finding and the absence of one — if the summer result is strong and the winter one is empty, the average shows a modest plus and you will believe it.

The control is a random minute in the same coins and days, so we compare not against zero but against an ordinary entry into an equally busy coin. Repeat alerts on the same coin within a few hours were collapsed into one case: without that, a single coin produced three "independent" second signals inside four minutes. We also looked at more than the result — at the path of the trade: how much you get to take against how much you have to sit through.

How it ended

The hypothesis did not hold. The typical result for the second signal is almost the same as for the first, and its share of trades that finished up is actually lower. So there is simply no point waiting for a second alert instead of the first: you lose part of the cases and get nothing in return.

The summer advantage did not reproduce. In the first half-year there was no trace of it: the typical second-signal trade lost money, and fewer than half finished up. The whole difference between the half-years rested on a handful of cases, half of them on a handful of coins. That was not a finding, it was a pile of episodes. The spin-off idea "the stronger the spike, the better the snap back" collapsed along with it: in one window it was a clean staircase, in the other it was noise with no order at all.

And one more detail that matters more than the results themselves: with the second signal the path of the trade is perfectly symmetrical. You get to take exactly as much as you have to sit through. The first signal at least has some skew, small as it is. The second has none. So the confirmation did not make the move smoother — it did nothing.

This is a negative answer, not "not enough data". The second signal was tested as its own class and showed no advantage over the first.

What this teaches

More in this section

A long shelf, then a break upward
The idea: price sits in a well-worn range for months, and leaving it means a run to the next such range. When we tested it, breaking out of the shelf paid exactly as much as a random day on the same coin.
Big orders in the book as a reference point
The idea: a big order in the book is a level price will bounce off, or a level it will aim for. When we tested it, price reached such a wall no more often than it reached a randomly picked level at the same distance.
Buying into a vertical spike
The idea: the coin has gone vertical, so a move has started and you should get on board while it runs. When we tested it, buying the spike was not a zero but a loss: far fewer trades finished up than with a random entry.