Indicator Overview

The Sharpe Ratio indicator measures the risk-adjusted return by calculating the annualised excess return over a risk-free rate (fixed at 3%) divided by the standard deviation of returns, using user-selectable rolling windows (90-day, 180-day, 365-day, or 730-day). The metric is displayed on the primary axis with a dual-gradient colour scheme, red intensifying for negative values (poor risk-adjusted performance) and green intensifying for positive values (strong risk-adjusted performance), while price is overlaid on a secondary logarithmic axis in white for contextual reference.

Dual-Ticker Comparison Logic

The ‘Crypto’ fields allow the indicator to operate in both absolute price and relative performance modes, making it suitable for outright positioning or pair-based allocation decisions.

• Single Crypto Analysis: If Crypto 2 is left blank, the indicator measures Crypto 1 against US Dollars. This mode is designed to identify statistically stretched rallies, deep mean-reversion zones, and long-term accumulation conditions where price trades multiple standard deviations below its historical average.

• Relative Strength and Ratios: When both fields are populated, the indicator automatically constructs a ratio of Crypto 1 divided by Crypto 2, such as ETH/BTC or SUI/SOL. The metric is then calculated on the ratio itself, isolating relative performance and stripping out broad market beta. This enables precise identification of overperformance, underperformance, and regime shifts between assets.

How To Use

High and rising Sharpe Ratio values (especially above 1.0–2.0) signal strong risk-adjusted outperformance, indicating efficient bull markets, healthy accumulation phases, and favourable reward-to-risk conditions for holding or entering positions, while low or negative values highlight periods of poor returns relative to volatility, often marking bear markets, drawdowns, or inefficient price action warranting caution or reduced exposure.