Inside Lucent Capital: The Methodology Behind Our Strategy
At Tiny Dancer, we believe in transparency. That includes how we quietly fund many of our projects behind the scenes. One of the most unique parts of our operation is Lucent Capital, a self-funded, automated trading strategy built by our founder to help sustain impact initiatives like art therapy workshops and sanctuary education trips.
This post offers a detailed breakdown of how that strategy works. If you’re analytically inclined or simply curious about how a data-driven engine supports a compassion-driven mission, you’re in the right place.
🧠 Strategy Framework
I designed the system around market regimes, dynamically selecting from four strategies based on macro conditions:
| Regime | Strategy | Logic |
|---|---|---|
| Bull + Low Vol | Momentum | Ride breakouts in strong trends |
| Bull + High Vol | Fade + Follow | Switch between fading exhaustion and following breakouts |
| Bear + Low Vol | Mean Reversion | Buy oversold dips |
| Bear + High Vol | Risk-Off | Protect capital, counter-trend |
⚙️ Signal Generation Logic
🔹 Momentum
- Buy if price breaks above Donchian High, above SMA, RSI between 70–90, and volume > 1.9x average.
- Sell if breakdown below Donchian Low, below SMA, RSI < 30.
🔹 Fade & Follow
- Fade: Short overbought conditions (RSI > 90, price > upper BB), buy oversold (RSI < 10).
- Follow: Go long on momentum breakouts (RSI > 70, price > BB), or short breakdowns (RSI < 30).
🔹 Mean Reversion
- Buy when price dips below lower Bollinger Band and RSI < 10.
- Short when price exceeds upper BB and RSI > 90.
🔹 Risk-Off
- Buy when RSI < 5 and price is 5% below 5-day SMA.
- Conservative positioning to preserve capital in bear markets.
🔍 Trade Management
Each strategy uses calibrated parameters:
| Strategy | Stop Loss (ATR) | Take Profit (ATR) | Max Duration |
|---|---|---|---|
| Fade | 2.0 | 1.5 | 5 days |
| Follow | 2.5 | 3.0 | 15 days |
| Mean Reversion | 2.5 | 1.5 | 12 days |
| Risk-Off | 2.0 | 1.5 | 7 days |
Entries are executed the next open after a signal. Position sizing is dynamic, based on a 2% capital risk per trade.
📊 Backtesting & Scoring
For each signal:
- Trades are simulated based on realistic fills (entry = next open).
- Exit at TP, SL, signal reversal, or timeout.
- Returns, drawdowns, win rate, and Sharpe ratios are logged.
Each ticker is scored using a composite metric weighted across:
- Normalized return
- Sharpe ratio
- Drawdown (inverted)
- Win rate
Top signals can be selected for execution or capital allocation.
🌱 Mission: Profits for Good
This system is more than an algorithm. My long-term vision is to:
- Deploy real capital into these strategies,
- Donate profits to animal welfare and compassionate causes,
- Inspire others to align trading with meaning.
The project is open to collaboration, investment, and visibility. I’m actively looking for:
- Donors or investors interested in compassionate finance,
- Hiring managers who value mission-driven builders,
- Fellow quants or engineers interested in scaling this.
📎 Learn More
If you’d like to:
- View my live dashboard
- Access strategy summaries
- Collaborate or support the cause
This strategy isn’t open to outside investors and isn’t marketed as a financial product. It exists to quietly support the work we do at Tiny Dancer—helping creativity and compassion thrive.
Lucent Capital is a private, self-funded research project. This content is shared for transparency and inspiration only, and does not constitute investment advice.
Tiny dancer 