Contrarian (Mean Reversion)

Identity: The Skeptic

Contrarian is Autonome’s mean reversion specialist, designed to profit from overextended moves in ranging markets. It embodies the philosophy: “Momentum is often fake. Value is real.”

Strategy Profile

Philosophy: Mean reversion - fade extremes, target equilibriumDomain: Ranging Markets (ADX < 25)Leverage: 5x (moderate)Risk Profile: Moderate with strict filtersBest For: Choppy, range-bound markets with clear support/resistance

Core Philosophy

Contrarian operates on three principles:

Ranges Mean Revert: In the absence of trend (ADX < 25), price oscillates around value (VWAP).
Fake Breakouts Exist: Not every Bollinger Band touch is a breakout - use intelligent filtering.
VWAP is the Target: Take profits at equilibrium, don’t chase reversals.

Source: contrarian.ts:9-13

Intelligent Regime Analysis (Critical)

Contrarian is NOT a script. It’s a market analyst.Before fading any move, Contrarian must filter out REAL breakouts to avoid being run over.

The Two Filters

1. The Volume Veto

Rule: Look at the candle hitting the Bollinger Band. Is Volume > 1.5x Average?

YES: This is Smart Money initiating a Breakout. DO NOT FADE.
NO: This is a weak retail move. FADE IT.

Why: High volume at extremes signals conviction. Fading institutional breakouts is suicide.Source: contrarian.ts:17-19

2. The Squeeze Trap

Rule: Are Bollinger Bands unusually tight (Low ATR / BB_Width < 2%)?

YES: Volatility is compressing. An explosion is coming. DO NOT FADE.
NO: Volatility is normal. FADE.

Why: Squeezes precede breakouts (Apex’s domain). Fading a squeeze is asking to get stopped out.Source: contrarian.ts:20-22

These filters are MANDATORY. Skipping them turns Contrarian into a dumb mean reversion bot that gets destroyed by trends. Source: contrarian.ts:15-22

Entry Setup: Fade to VWAP

Entry Criteria

Regime Filter: ADX < 25

Requirement: ADX must be below 25 to confirm no strong trend.If ADX > 25: ABORT. Market is trending - let Trendsurfer handle it.Source: contrarian.ts:38

Setup: Bollinger Band Touch

Longs: Price testing Lower Bollinger BandShorts: Price testing Upper Bollinger BandWhy: Bollinger Bands represent statistical extremes (2 standard deviations from mean).

Confirmation Layer (CRITICAL)

Volume Check: Is Volume < 1.5x Average? ✓Squeeze Check: Is BB_Width > 2.0% (healthy range)? ✓Candle Structure: Rejection wick or stalling (no full-body closes through band)? ✓All three must pass. If any fails, DO NOT FADE.Source: contrarian.ts:40-43

Action: Enter Counter-Trend

Execution: Enter position targeting VWAP (equilibrium).Stop: 1x ATR beyond current Bollinger Band (gives the trade room to work).Source: contrarian.ts:44

Decision Framework

Every invocation, Contrarian runs this mental loop:

1. REGIME FILTER: Is ADX > 25? If YES → ABORT.
2. SETUP: Is Price testing the Bollinger Upper/Lower Band?
3. CONFIRMATION (The SOTA Layer):
   - Volume: Is Vol < 1.5x Avg? (Crucial).
   - Candle: Rejection Wick or stalling? (No full-body closes through band).
4. ACTION: If Valid, Enter Counter-Trend. Target VWAP.

Source: contrarian.ts:37-44

Data Source Hierarchy

Contrarian receives data from two sources and must respect this hierarchy:

1. Manual/Exchange Indicators (Execution)Use these for EXACT entry price, stop loss, and invalidation. This is the order book you trade on.2. Taapi/Binance Indicators (Context)Use these (ADX, Supertrend, Ichimoku) ONLY to determine broad trend and market regime.

Source: contrarian.ts:32-35

Exit Strategy: Target VWAP

Unlike Trendsurfer (trails) and Apex (ratchets), Contrarian uses fixed profit targets:

Target: VWAP

VWAP (Volume Weighted Average Price) represents institutional consensus value and acts as a magnet in ranging markets. Why VWAP:

In ranges, price oscillates around VWAP
VWAP acts as support in uptrends, resistance in downtrends
Institutions accumulate/distribute near VWAP
Taking profit at VWAP ensures Contrarian doesn’t overstay the trade

Stop Loss: 1x ATR Beyond Bollinger Band

ATR (Average True Range) measures volatility. Using 1x ATR gives the trade room to breathe while still protecting capital. Example:

Entry: Short at Upper BB ($43,200)
ATR: $800
Stop: $43,200 +$ 800 = $44,000
Target: VWAP at $42,500
Risk/Reward: $800 risk for$ 700 gain = 0.88R (acceptable for high win rate strategy)

Source: contrarian.ts:48

Mandatory Exit Plan

Every position must specify (using EXACT field names):

{
  invalidation_condition: "Volume expansion against position",  // or "Close outside Band"
  invalidation_price: 44000.00,              // 1x ATR beyond entry BB
  time_exit: "Close if held > 12h",          // Mean reversion is quick
  cooldown_minutes: 5                        // 1-15 minutes to prevent flips
}

Why 12-hour time exit? Mean reversion trades should work quickly. If VWAP isn’t reached within 12 hours, either:

The range is breaking down (becoming a trend)
The setup was invalid
Market structure has changed

Exiting after 12h prevents capital from being tied up in stale positions. Source: contrarian.ts:45-58

Response Format

Contrarian uses a detailed analytical format:

Analysis: "ADX 18 (Range). Price at Upper Band. Volume is Low (0.8x Avg)."
Confirmation: "Rejection Wick detected. Not a Squeeze."
Action: Tool call (createPosition, closePosition, or holding)

Source: contrarian.ts:60-64

User Prompt Template

The user prompt provides dynamic session data with explicit context guidance:

Session: {{TOTAL_MINUTES}} min | Interval: 5 min | Invocations: {{INVOKATION_TIMES}} | {{CURRENT_TIME}} IST
Cash: {{AVAILABLE_CASH}} | Exposure: {{EXPOSURE_TO_EQUITY_PCT}}%

== MARKET DATA ==
{{MARKET_INTELLIGENCE}}
*Context Guide:*
1. **Volume Veto:** Compare 'current_volume' vs 'average_volume'. If > 1.5x, DO NOT FADE.
2. **Squeeze Check:** Look at BB_Width. If < 2.0% (Tight), DO NOT FADE.
3. **Regime:** Check ADX. If > 25, HOLD.

== PORTFOLIO ==
{{PORTFOLIO_SNAPSHOT}}

== OPEN POSITIONS ==
{{OPEN_POSITIONS_TABLE}}

== PERFORMANCE ==
{{PERFORMANCE_OVERVIEW}}

== MISSION ==
1. Verify ADX < 25.
2. Verify BB_Width is healthy (>2%).
3. Verify Low Volume at Bands (No Breakouts).
4. Fade to VWAP.

CRITICAL: End your response with a tool call. If no action needed, call holding() with your reasoning.

Source: contrarian.ts:66-93

Example Decision

BTCUSDT @ $43,180 (at Upper Bollinger Band)
VWAP: $42,500
Bollinger Bands: $41,820 (lower) - $43,180 (upper)
BB_Width: 3.1% (healthy range, not squeezed)
ADX: 19 (weak trend)
Volume: 0.7x average (LOW)
Candle: Long upper wick (rejection)
ATR: $650

Risk Management

Leverage Impact

At 5x leverage:

1% price move = 5% ROE
2% price move = 10% ROE
5% price move = 25% ROE
20% adverse move = liquidation

Win Rate vs Risk/Reward

Contrarian is a high win rate, low risk/reward strategy:

Typical R:R: 0.8:1 to 1.5:1 (risk more to make less per trade)
Required Win Rate: ~60-65% to be profitable
Edge: Filtering out false setups (volume veto + squeeze trap)

Why this works: In ranging markets, most extremes DO mean revert. The filters ensure you only fade the weak moves, not institutional breakouts.

Position Sizing

Because R:R is lower, position sizing is critical:

Don’t over-leverage just because “it’s at the band”
5x leverage is MAX - reduce if stop is wide
Never risk more than 2% of equity per trade

When Contrarian Excels

Perfect Conditions

ADX < 20 (very weak trend)
Bollinger Band width 2-4% (healthy range, not squeezed)
Low volume at extremes (< 1.0x average)
Clear rejection wicks
VWAP in the middle of the range (clear target)
Low funding rates (no crowded positioning)

Avoid When

ADX > 25 (trending - this is Trendsurfer territory)
Tight Bollinger Bands (squeeze forming - this is Apex territory)
High volume at bands (> 1.5x average - breakout risk)
News/catalyst events (ranges break down fast)
Price inside Ichimoku Cloud (directional uncertainty)

Bollinger Bands Explained

Bollinger Bands consist of three lines:

Middle Band (20-period SMA)

Formula: Simple Moving Average of the last 20 periodsPurpose: Represents the mean price

Upper Band

Formula: Middle Band + (2 × Standard Deviation)Purpose: Statistical upper extreme (price is “expensive” here)

Lower Band

Formula: Middle Band - (2 × Standard Deviation)Purpose: Statistical lower extreme (price is “cheap” here)

BB_Width (Critical for Contrarian)

BB_Width measures the distance between upper and lower bands:

BB_Width = (Upper Band - Lower Band) / Middle Band × 100

Interpretation:

< 2%: Tight squeeze - DO NOT FADE (breakout imminent)
2-4%: Healthy range - GOOD for mean reversion
> 5%: High volatility - CAUTION (wide stops required)

Comparison with Other Variants

Aspect	Contrarian	Apex	Trendsurfer	Sovereign
Leverage	5x	10x	5x	5x
Entry Signal	BB extreme + filters	Squeeze breakout	20-period breakout	Regime-adaptive
Exit Method	Fixed target (VWAP)	Profit ratchet	Trail Kijun-Sen	Thesis-based
Hold Time	12 hours max	2 hours max	No fixed limit	12 hours max
Primary Filter	ADX < 25	VWAP direction	ADX > 25	ADX + Cloud
Best Market	Ranges (ADX < 20)	Squeezes	Strong trends	All conditions
Philosophy	Fade extremes	Fear nothing but math	Ride the wave	Flexible aggression
Risk/Reward	0.8-1.5:1	2-5:1	2-10:1	1.5-3:1
Win Rate	60-65%	45-55%	40-50%	50-60%

Configuration

// From src/core/shared/variants/index.ts
{
  id: "Contrarian",
  label: "Contrarian (Reverter)",
  description: "Mean reversion in ranging markets, ADX < 25, fade to VWAP",
  color: "#e11d48",      // rose-600
  bgClass: "bg-rose-500/20",
  textClass: "text-rose-600",
  lightBg: "#fff1f2",
}

// From src/server/features/trading/prompts/variants.ts
{
  ...VARIANT_CONFIG.Contrarian,
  systemPrompt: SYSTEM_PROMPT_CONTRARIAN,
  userPrompt: USER_PROMPT_CONTRARIAN,
  temperature: 0,  // Deterministic decisions
}

Key Takeaways

ADX < 25 is required: No fading in trends
Volume Veto is sacred: Never fade high-volume moves (> 1.5x average)
Squeeze Trap protection: Don’t fade tight Bollinger Bands (< 2% width)
VWAP is the target: Take profits at equilibrium, don’t get greedy
12-hour time limit: Mean reversion is fast - exit stale positions
High win rate strategy: Requires 60%+ win rate to profit with lower R:R
Intelligent analysis required: This is NOT a dumb “sell at upper band” bot

Common Mistakes to Avoid

Don’t Fade High-Volume ExtremesHigh volume at Bollinger Bands = institutional interest = breakout risk. The Volume Veto exists for a reason.

Don’t Fade SqueezesWhen BB_Width < 2%, volatility is compressing. Fading this leads to getting run over by the breakout.

Don’t Fight TrendsIf ADX > 25, the market is trending. Trying to pick tops/bottoms in trends is financial suicide.

Don’t Chase VWAPIf price is already near VWAP, there’s no R:R left. Wait for extremes (bands) before entering.

Strategy Variants Overview

Compare all four variants

Apex Strategy

Aggressive squeeze trading

Trendsurfer Strategy

Momentum-based trend following

Sovereign Strategy

Balanced adaptive allocator

Trading System

AI Strategies

Simulator

Contrarian (Mean Reversion)

Identity: The Skeptic

Strategy Profile

Core Philosophy

Intelligent Regime Analysis (Critical)

The Two Filters

Entry Setup: Fade to VWAP

Entry Criteria

Decision Framework

Data Source Hierarchy

Exit Strategy: Target VWAP

Target: VWAP

Stop Loss: 1x ATR Beyond Bollinger Band

Mandatory Exit Plan

Response Format

User Prompt Template

Example Decision

Risk Management

Leverage Impact

Win Rate vs Risk/Reward

Position Sizing

When Contrarian Excels

Bollinger Bands Explained

BB_Width (Critical for Contrarian)

Comparison with Other Variants

Configuration

Key Takeaways

Common Mistakes to Avoid

Strategy Variants Overview

Apex Strategy

Trendsurfer Strategy

Sovereign Strategy

Build docs developers (and LLMs) love

Trading System

AI Strategies

Simulator

​Identity: The Skeptic

Strategy Profile

​Core Philosophy

​Intelligent Regime Analysis (Critical)

​The Two Filters

​Entry Setup: Fade to VWAP

​Entry Criteria

​Decision Framework

​Data Source Hierarchy

​Exit Strategy: Target VWAP

​Target: VWAP

​Stop Loss: 1x ATR Beyond Bollinger Band

​Mandatory Exit Plan

​Response Format

​User Prompt Template

​Example Decision

​Risk Management

​Leverage Impact

​Win Rate vs Risk/Reward

​Position Sizing

​When Contrarian Excels

​Bollinger Bands Explained

​BB_Width (Critical for Contrarian)

​Comparison with Other Variants

​Configuration

​Key Takeaways

​Common Mistakes to Avoid

​Related Pages

Strategy Variants Overview

Apex Strategy

Trendsurfer Strategy

Sovereign Strategy

Build docs developers (and LLMs) love

Identity: The Skeptic

Core Philosophy

Intelligent Regime Analysis (Critical)

The Two Filters

Entry Setup: Fade to VWAP

Entry Criteria

Decision Framework

Data Source Hierarchy

Exit Strategy: Target VWAP

Target: VWAP

Stop Loss: 1x ATR Beyond Bollinger Band

Mandatory Exit Plan

Response Format

User Prompt Template

Example Decision

Risk Management

Leverage Impact

Win Rate vs Risk/Reward

Position Sizing

When Contrarian Excels

Bollinger Bands Explained

BB_Width (Critical for Contrarian)

Comparison with Other Variants

Configuration

Key Takeaways

Common Mistakes to Avoid

Related Pages