Why 99.9% of crypto channels are a scam. GG-SHOT as an example
Today we discussed about gg-shot indicator with Mr. Naveen from India and I told him the whole truth why it has such winrates and why in the output we get at best zero, BUT mostly loss. He asked me to do an article, because he thinks it will be useful to many people. Well, if it's necessary, it's necessary!
I will tell and show you by the example of the gg-shot indicator why the lion's share of channels is just a scam that does not bring profit and you will actually incur losses. We will use the great mathematics, the queen of all sciences.
In this article I will use abbreviations:
RR- Risk Reward Ratio, the value of risk to profit. This value tells us how much we can earn if we enter into a position with a risk of losing a certain % of our deposit.
Let's say RR = 3, that means that if we enter into a trade with a risk of 1% of our deposit, we will
Lose maximum: 1% of the deposit
Gain maximum (specially marked): 3% to the deposit
We take the last signal gg-shot from the free channel:
To understand how much we can really earn. We need a formula for calculating RR:
For a long position: (Last Take Profit - Entry Price) / (Entry Price - Stop Loss Price)
For short: (entry price - last take profit) / (stop loss price - entry price)
Now that we have the formulas, let's start calculating how much we can actually earn, taking into account the fixing of takeprofits, because if we do not fix them in parts, in a signal that does not reach the last takeprofit (and this happens in 90% of cases) - we will not earn anything at all, BUT only lose. Let's assume that at each TP we will fix 25% of the entire position. Let's calculate the profit taking:
First TakeProfit: (1.021 - 1) / (1 - 0.951) = 0.021 / 0.049 = 0.43
Second TP: (1.041 - 1) / (1 - 0.951) = 0.041 / 0.049 = 0.83
Third TP: (1.061 - 1) / (1 - 0.951) = 0.061 / 0.049 = 1.24
Fourth TP: (1.121 - 1) / (1 - 0.951) = 0.121 / 0.049 = 2.47
BUT we also need to take into account the % of fixing, don't we? As I said, let's assume we will fix 25% on each take, so
First takeprofit: (1.021 - 1) / (1 - 0.951) = 0.021 / 0.049 = 0.43 * 0.25 = 0.1%
Second TP: (1.041 - 1) / (1 - 0.951) = 0.041 / 0.049 = 0.83 * 0.25 = 0.2%
Third TP: (1.061 - 1) / (1 - 0.951) = 0.061 / 0.049 = 1.24 * 0.25 = 0.3%
Fourth TP: (1.121 - 1) / (1 - 0.951) = 0.121 / 0.049 = 2.47 * 0.25 = 0.61%.
This is how much we will fix at each TP. Now add up everything and get what we would earn if we entered this signal with the risk of losing 1% of the deposit if the price reaches the stop loss:
Total: 0.1 + 0.2 + 0.3 + 0.61 = 1.21% of the deposit we earned from this signal.
There is one small BUT we have two entry points on the signal ... Okay, no problem, let's make a calculation based on this:
First takeprofit: (1.021 - 0.971) / (0.971 - 0.951) = 0.05 / 0.02 = 2.5 * 0.25 = 0.62%
Second TP: (1.041 - 0.971) / (0.971 - 0.951) = 0.07 / 0.02 = 3.5 * 0.25 = 0.87%.
Third TP: (1.061 - 0.971) / (0.971 - 0.951) = 0.09 / 0.02 = 4.5 * 0.25 = 1.12%
Fourth TP: (1.121 - 0.971) / (0.971 - 0.951) = 0.15 / 0.02 = 7.5 * 0.25 = 1.87%.
Total: 0.62 + 0.87 + 1.12 + 1.87 = 4.48% to the deposit we could earn if we had entered the signal only at the second entry point (BUT the price hasn't reached it)
Now let's add up the numbers from the first condition (that we got in at the first entry point) with the second condition (that we got in only at the second entry point) and divide by 2:
And now the real maximal RR by this signal, taking into account takeovers, and taking into account the fact that the price could have gone down to the second entry point:
(4.48 + 1.21) / 2 = 2.84 - this is our real RR for this position if the price got to the second entry point.
BUT the real profit of this signal would be 1.21% / 2 = 0.65% of the deposit. The number 2 because at each entry point we would have entered with the risk of losing 0.5% of the deposit, taking into account that our maximum loss should be 0.5% of the deposit. Of course we can enter at the first entry point with 0.7% of the deposit risk, and at the second entry point with 0.3% of the deposit risk, there are many variants, BUT we let's assume we distribute everything equally.
This means that we can safely divide the resulting % to the deposit by 2, and this is already 0.6% of the deposit profit maximum, at a risk of losing 1%. It turns out that the actual RR will be equal to 0.6% in this signal. In this case, on each of our losing trades closed by a stop loss, we need two profitable trades that would be in the black. And here also has one tiny BUT, we made calculations under the condition that the signal reached the last TP, BUT as I said earlier, he just in most cases does not reach it ...
And now let's get back to the signal:
It is written that the win rate of this strategy is 88.83%. You'd be surprised, BUT it's not true, because the gg-shot indicator win rate is calculated this way: if the price reached dynamic take profit* or the first take profit, the signal is considered profitable.
*Where the dynamic take profit is unknown, they are calculated using Fibonacci zones, which are built "on the fly", respectively, you can not calculate the real profit. (I haven't added this function to my indicator, it's useless).
I adjusted my indicator [IMBA] ALGO to give the same signals as the gg-shot indicator strategy on this coin and now we get the real picture:
It turns out that for six months there were 148 signals, and we barely came out in the +, and if we also take into account the commission - it will be a minus. BUT the win rate is 64%.
We can try to put a stop loss at breakeven after the first take:
BUT as we can see, the profit went into minus at all... BUT the win rate rose to 75.6%... This is the numbers that the administrator of gg-shot channel shows you, and not only he, such channels are in majority, others show % of price movement with huge stops, when you reach them you need to make 10 profitable deals to recover the loss from one signal...
I will now take 5-10 minutes and tune indicator to maximize the profit of this coin, BUT I must say straightforward, it is one of the worst coins for an indicator
And now I have managed to squeeze out at least 11% of profit to the deposit, BUT the winrage is already less than 50%...
Conclude yourself, what is more important for you, to see the percentage of price movements multiplied by the leverage, which are shown by admins of some Telegram channel, or win rate, which does not say anything, as I have just proved to you.
Only one thing is important: the correct calculation of RR. You absolutely do not care about the leverage, in this case, you only care about what % of the deposit you are willing to lose in a deal and in a deal with what RR you enter.
My Conclusion: Start analyzing whether it is worth paying attention to signals, which need 10 profitable deals to cover 1 stop. Who are those people, who pay every month $ 750 for gg-shot (actually it is gg-shit) ...
In conclusion, I would like to say I hope this article will help someone. I also hope that people will stop paying for gg-shot because of me. After all, my indicator is its exact copy, it's free and much better, because you can configure it so that there is real profit, not empty numbers...
Look how many BUTs are in this article (I've highlighted them all) and make the right conclusions:)