Strategies
HYPE spot failed-selloff recovery
Outcome: Abandoned
HypeSpotFailedSelloffRecovery
Outcome Summary
HypeSpotFailedSelloffRecovery bought HYPE spot when a four-hour selloff recovered before the bar closed. Its 264-trade backtest lost 27.43%, with a -1.61 Sharpe ratio and -0.188% average return per trade. Backtest review abandoned it for negative expectancy after costs; optimization and later stages were not reached.
Hypothesis
Trade HYPEUSDC.HYPERLIQUID_SPOT long-only on completed four-hour bars. The hypothesis is that continuous fee-funded HYPE purchases help absorb selloffs that begin recovering within the same bar. The local catalog has 4,018 four-hour spot bars from November 2024 to September 2026. An exploratory check found 105 nonoverlapping signals, but it was used to select the rule and is not out-of-sample evidence. Source: https://hyperliquid.gitbook.io/hyperliquid-docs/trading/fees
The signal measures recovery within the completed selloff bar, and the strategy trades only long HYPE spot with equity-relative sizing. Hyperliquid documents that its assistance fund converts fees to HYPE and burns it (https://hyperliquid.gitbook.io/hyperliquid-docs/trading/fees). The exploratory 105 signals were used to select the rule and provide no out-of-sample evidence.
Negative expectancy on 264 trades: the failed-selloff recovery rule loses after costs across the measured sample. Threshold optimization is not justified.
Implementation
Buys HYPE spot when a completed four-hour bar falls at least 2.5% below its open and recovers at least 65% of that decline by the close. A bracket sets a 3% stop and 4.5% target; any remaining position closes after six bars.
Backtest Review
- Sharpe
- -1.61
- Total return
- -27.43%
- Max drawdown
- 33.43%
- Trades
- 264
- Win rate
- 38.6%
- Profit factor
- 0.79
The 264 recorded trades are all long, consistent with the stated direction, and provide a substantial sample.
Net average trade return is -0.188% versus the 0.15% spot fee-viability floor. Profit factor is 0.79, Sharpe is -1.61, and total return is -27.43%. The measured recovery rule has negative expectancy.
Outcome Summary
The recovery rule needs positive net trade expectancy before threshold optimization is warranted.
Backtest review abandoned the strategy because the rule had negative expectancy after costs. Optimization and later stages were not reached.
The strategy bought HYPE spot after a selloff recovered within a completed four-hour bar.
Across 264 long trades, the backtest returned -27.43% with a -1.61 Sharpe ratio. Average trade return was -0.188% of notional.
Backtest and paper results are hypothetical. Trading involves risk of loss.