Chapter 6 gave each coin a label and its setups, or a pass. Which deserves a plan today? To find crypto coins to trade, start from that labelled list, not a movers list. Check volatility, volume and funding on the contract you would trade, keep up to five with a reason each, and write down why the rest pass.
A movers list ranks one measure and cannot supply a label or a setup, so start from your own list and use the tools to look. This step reads three things: candle size (ATR percent), whether the latest closed bar traded more than its own average on this contract, and who pays to hold it (funding, positioning context and not an indicator). None says where price goes. They can screen out coins that, on your assumptions, a plan could not afford or fill, and this manual cites no test that a coin passing them does better than one that fails. Write your exclusions and a tie rule before you open a scanner, because a rule written after the list can be fitted to it.
| Line | What you write | Test it must pass |
|---|---|---|
| Rules written first | Your exclusions, the planned hold, a volume multiple if a plan you would write carries a volume condition, and a tie rule such as the order of your Markets line. | Were they written before you saw today's list? |
| Coins in scope | From chapter 6, each coin with its label, flag and eligible setups. A coin with no eligible setup goes on the pass list now. | Does every coin left have a setup beside it? |
| Volatility | Each coin's ATR(14) divided by its last close, as a percent, on its decision chart, read on a closed candle, with the date. | Is it from your chart and not a scanner's list, with the same length for every coin? |
| Volume and book | The contract's latest closed volume bar over the average of the 20 closed bars before it (the volume page's example window, a choice), with its unit, on the exchange you trade. Then the order book: fill your size against the resting orders on entry and on a stop, and write the average fill against the best price. If depth is hidden, write that. | Is it the contract's volume and not a summed figure, and does the book give your size worse fills than your allowance? |
| Funding | The contract's current rate, its interval, and its recent history on the contract page. Whether your side pays. The payments you would make over the planned hold if the rate stayed where it is. | Are rate and interval from the contract page, and is a payment you would receive left out of costs? |
| Costs (provisional) | Cost per unit, c, as a percent of price: fees on both fills, a spread and slippage allowance from recent fills, and the funding you would pay. Costs within one fifth of the planned loss means c / (s + c) is at most 1/5, so the stop distance s must be at least 4c. Write 4c. Beside it, the stop your map implies: the distance from today's price to the invalidation price on your chapter 5 map, plus a buffer you assume. | Is the implied stop at least 4c? If not, write "fails on these assumptions" and the numbers. |
| Group | For each pair of coins, the correlation of candle returns (close-to-close percent changes) over the last 60 candles of your decision chart. A platform's coefficient for two symbols is the manual route. Same-direction setups above 0.7, or opposite-direction setups below -0.7, are one group, and a connected chain counts as one. Keep one coin per group by your tie rule, or carry both and know the group cap will shrink each. | Can you say which group every coin is in? |
| Shortlist | Up to five coins, each as one line naming the setup and the checks that held. | Does each line name a setup and a check? |
| Pass list | Every other coin, with its reason. | Is every coin on exactly one list? |
Objectives
This step supports the shortlist step of the decision cycle: which coins deserve a plan today. It comes here because a plan, a stop and a size each cost effort, and a coin that cannot clear its costs is cheaper to drop now. It uses each coin's label, flag and eligible setups from chapter 6, the invalidation prices on your chapter 5 maps, the fee and funding lines of your fact sheet, and the cost limit and group rule from your risk budget sheet.
- Start from your labelled list and drop coins with no eligible setup.
- Read ATR percent, volume against its own average, the book and the funding rate on the contract you would trade.
- Work out the narrowest stop that clears the one-fifth cost line and compare it with the stop your map implies.
- Group coins that move together and keep one per group, or accept a smaller size for each.
- Write a shortlist with reasons and a pass list with reasons.
ATR(14) with Wilder smoothing is the published default. A volume multiple is your choice and rejects a coin only for a plan with a volume condition, which three setup pages allow; otherwise it is context. The 60-candle window and the 0.7 line are this manual's working figures from the portfolio risk page, and the one-fifth line is its choice from the costs page. This manual cites no test of extreme funding against later price on perpetuals. Up to five is this manual's choice for the shortlist, not a tested number, and fewer or none is allowed.
Hypothetical walkthrough: six coins, two on the shortlist
Hypothetical walkthrough. Invented prices and an invented outcome, chosen to teach the decision. Not a recorded trade, and not evidence of how often this setup works.
Assume a reader with six labelled coins, A to F, on daily decision charts. Their rules, written first: pass anything unclear; volume is context, since none of their plans has a volume condition yet; pass if the book's slippage on their size is above their allowance; plan a two-day hold with 8-hour funding, six payments if the rate stays put; and when coins form a group, keep the one earlier in their Markets line. Their sheet has a taker fee of 0.06% a fill, 0.12% on both, and an allowance of 0.20% for spread and slippage from recent fills. So c is 0.32% of price plus six times any rate their side pays, and 4c is the narrowest clear stop. The implied stop assumes a buffer of 0.5 times ATR(14), the setup pages' arithmetic example.
- E. Unclear in chapter 6, and their rule passes anything unclear. Pass, with no further reading.
- A. Advance, breakout continuation long. ATR percent 3.0, volume 1.4 times its 20-candle average, a deep book. Funding is +0.01% and the long pays 0.06%, so c is 0.38% and 4c is 1.52%. The map puts the invalidation 5.0% below price and the buffer adds 1.5%, so the implied stop is 6.5%. It clears.
- B. Advance, the same setup. ATR percent 2.6, volume 0.9 times, the same funding, so 4c is 1.52% and the implied stop is 4.5% plus 1.3%, 5.8%. It clears. But its returns correlate 0.82 with A's over the last 60 daily candles and both are longs, so they are one group. A is earlier in the Markets line, so B goes on the pass list: same group as A.
- C. Decline. The falling wedge long and the oversold bounce long are named for a decline. The oversold bounce page needs a lower high to mark and the map has one, so that is the setup. ATR percent 4.2, volume 1.1 times, a deep book, funding -0.04%: shorts pay and a long receives, which they leave out of costs. So c is 0.32%, 4c is 1.28%, and the implied stop is 3.5% plus 2.1%, 5.6%. Correlation with A is 0.35, a separate group. It stays.
- D. Advance, breakout continuation long. ATR percent 1.1, volume 1.0 times. Funding is +0.10%, so a long pays 0.60% over the hold if the rate stayed put: c is 0.92% and 4c is 3.68%. The map puts the invalidation 2.4% away and the buffer is 0.55%, an implied stop of 2.95%, which is 0.73 points short. Pass: fails on these assumptions. A different entry or buffer could change that, and chapter 8 reruns the test.
- F. Advance, breakout continuation long. The latest closed volume bar is 3.4 times its average. Under their rules that is context, not depth. Assume a 10-unit market buy, their size, would average 0.62% above the best ask, the costs page's thin figure, on entry alone, against an allowance of 0.20% for both fills. Their rule says pass: thin book.
The shortlist is A (advance, breakout continuation long: costs clear, volume context, small funding paid by the long) and C (decline, oversold bounce long: costs clear, funding negative, context only). The pass list is B (same group as A), D (cost screen), E (unclear) and F (thin book). The outcome was chosen to show four reasons to pass. Passing these checks earns a plan, not a stop or a size.
Reading list
- Indicators overview: write the question before you open an indicator, and read each indicator's setting and limit.
- Volatility: ATR percent for comparing coins. The volatility scanner is a prompt, not ATR, so read ATR percent on the chart you trade.
- Volume: a bar against its own average on the contract you trade, why reported volume can be inflated, and why volume is not depth. The volume scanner ranks the change in a 24-hour figure summed across exchanges, so treat it as a prompt and read your contract's own bars.
- Funding rates: who pays whom, what the payments cost over a hold, and what an extreme rate says and does not say. The funding scanner lists current rates across contracts, and the contract page is the manual route.
- Trading costs and liquidity: fees, spread, slippage, the one-fifth line, and why the same order costs more in a thin book.
- Portfolio risk: grouping coins by the correlation of candle returns, and the cap on each group.
Take the steps in table order: the book comes before costs, because a thin book can break the slippage allowance.
This chapter cannot settle whether a shortlisted coin's trigger will appear, where its stop goes, or whether a plan on it has any edge. The cost line here uses a stop implied by your map and an assumed buffer, so it is a screen and not the real test. The question to carry forward: for each shortlisted coin, what would you see that makes you act, and what ends the idea? Entries, stops and exits turns each coin into an if-then plan.
You should now be able to
- Start a shortlist from your labelled list and drop any coin with no eligible setup.
- Read ATR percent, volume, the book and funding on one contract.
- Write 4c beside each coin's implied stop and mark it clear or failed.
- Say whether two coins on your list are one group, and which you keep.
- Say why a thin book, or funding that pushes costs past one fifth of the planned loss, is a reason to pass.
- Produce: your shortlist of up to five coins, each with a one-line reason, and a pass list with reasons, using the table at the top of this page.