Dual Macro Strategy

Combine Fed rate cut and recession prediction markets for a stronger trading signal.

⚠️Warning

Educational Purpose Only — This strategy example is for demonstration and learning purposes only. It is not financial advice. Prediction markets and cryptocurrency trading involve significant risk. Always do your own research before trading.

This strategy demonstrates how to combine multiple prediction market signals for higher-conviction trades. We only go long when BOTH conditions are favorable.

Visual Overview

Dual Macro: Fed + RecessionPrediction MarketLong BTC only when Fed is dovish AND recession risk is low

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The Concept

Thesis: A single macro indicator can give false signals. By requiring multiple favorable conditions, we filter out noise.

Bull case: Rate cuts are expected (above 50% odds) AND recession is unlikely (below 30% odds)

Bear case: Rate cuts unlikely (below 30% odds) OR recession is likely (above 45% odds)

Why Combine Signals?

Signal	Alone	Combined
High rate cut odds	Could be emergency cuts due to crisis	Rate cuts + low recession = bullish stimulus
Low recession odds	Economy stable but rates could rise	Low recession + cuts = goldilocks scenario

By requiring both conditions, we avoid false positives like "emergency rate cuts during a recession."

Strategy Setup

Data Sources

Data Source	Type	Details
`fed`	Prediction	Kalshi Fed Rate Cut market
`recession`	Prediction	Kalshi US Recession market
`btc`	Exchange	BTC-USD on 1D timeframe

Analysis Block: `signal`

Create an Advanced Block with these outputs:

cut_odds: fed.yes_odds
recession_odds: recession.yes_odds
macro_bullish: cut_odds > 0.50 AND recession_odds < 0.30
macro_bearish: cut_odds < 0.30 OR recession_odds > 0.45

Signal logic:

macro_bullish — Both conditions must be true (AND logic)
macro_bearish — Either condition invalidates (OR logic)

The asymmetry is intentional: we want high conviction to enter, but quick exits on any warning sign.

Entry Rule

Setting	Value
Direction	Long
Market	`btc`
When	`signal.macro_bullish`

Risk Management

Stop Loss:

Setting	Value
Type	Stop Loss
Level	6% (percentage)

Take Profit:

Setting	Value
Type	Take Profit
Level	20% (percentage)

Conditional Exit:

Setting	Value
Type	Exit
When	`signal.macro_bearish`

Risk Settings

Setting	Value
Position Sizing	2% risk per trade
Max Positions	1

Understanding the Signals

Rate Cut Odds

Level	Interpretation
Above 70%	Very dovish Fed, likely cutting soon
50-70%	Market expects cuts
30-50%	Uncertain, could go either way
Below 30%	Hawkish Fed, rates likely to hold or rise

Recession Odds

Level	Interpretation
Above 50%	Markets expect economic contraction
30-50%	Elevated concern
15-30%	Normal caution
Below 15%	Economy seen as healthy

Combined Interpretation

Fed Odds	Recession Odds	Signal
High (above 50%)	Low (below 30%)	Bullish — Stimulus without crisis
High (above 50%)	High (above 45%)	Neutral — Emergency cuts, uncertain
Low (below 30%)	Low (below 30%)	Neutral — Stable but no catalyst
Low (below 30%)	High (above 45%)	Bearish — Stagflation risk

Variations

Add Inflation Signal

Include CPI expectations as a third filter:

inflation_odds: inflation.yes_odds  # CPI above 3%
cooling: inflation_odds < 0.40
macro_bullish: cut_odds > 0.50 AND recession_odds < 0.30 AND cooling

Tiered Sizing

Use signal strength to adjust position size:

strong_bullish: cut_odds > 0.65 AND recession_odds < 0.20
moderate_bullish: cut_odds > 0.50 AND recession_odds < 0.30

Enter with 3% risk on strong_bullish, 1.5% on moderate_bullish.

Momentum Filter

Only enter when conditions are improving:

cut_odds_yesterday: cut_odds[1]  # 1 bar ago at 1D
recession_odds_yesterday: recession_odds[1]
improving: cut_odds > cut_odds_yesterday AND recession_odds < recession_odds_yesterday
entry: macro_bullish AND improving

Tips

Daily timeframe is usually sufficient — Macro conditions don't change hourly
Watch correlations — Fed and recession markets can be correlated; a crisis affects both
Consider lag — Prediction markets can be slow to update on weekends
Multiple contracts — Recession markets may have different time horizons (2025 vs 2026)

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