Two straight up weeks, a 46.43% gap below the high, and a signal built on nine weeks of history
Should the fund act on its first genuine up-trend signal and open a full-size long in ETH at the weekly rebalance, or open a reduced position because the signal rests on only nine weeks of price history?
The market facts are real; the decision maker is illustrative.
The week and the position
In the week of 16 April 2018, ETH rose 16.3% from 533.88 to 620.92, its second consecutive positive week after a 33.34% gain, with a best day of 8.62% on Friday and a worst day of -4.2% on Monday. Price ranged 29.39%, from a low of 497.31 to a high of 643.49, and closed 84.6% of the way up that range. Realised volatility was 82.4% annualised, ETH beat BTC by 11.13 percentage points, and the asset was still 46.43% below its 52-week high. An illustrative trend fund rebalances weekly and has only nine weeks of history to fit its signal.
Judgment
The up-trend is real over two weeks, but the 46.43% distance from the 52-week high and a nine-week sample mean the signal has almost no statistical standing. Open the long, but at a fraction of full size, sized so that a return to Monday's low of 497.31 stays inside the fund's loss limit, and treat the 29.39% weekly range as the volatility the position must survive between rebalances. Do not scale up on the strength of one 8.62% day.
What would change it
If a later weekly close falls back below the week's open of 533.88, close the position, since that would erase this week's 16.3% gain. The size can be raised to full once the history behind the signal extends well beyond nine weeks.
What sets this case apart
This case tests how much of a portfolio to commit to a young trend signal, not whether the trend exists.