Hello all,
At this point, you should start to be comfortable with how Whalinvest works. We are therefore going to tackle an essential subject for all trading activities, loss management!
This article isn't sponsored by Whalinvest and represents my own beliefs on this platform.
Prerequisites:
Have read at least the Starting guide and create customs bots, or already be an experienced user of Whalinvest.
Have basic knowledge of the cryptocurrency market and an established trading strategy.
Ask yourself the right questions:
There are four possible loss management strategies:
- Disabled stop loss (basically no loss management strategies)
- Cut losses according to a percentage
- Keep your initial trade amount
- Secure your benefits
Neither of these strategies is inherently good or bad, including "disabled stop loss". On the other hand, each corresponds to a particular strategy or to a particular investor profile.
A good way to choose your strategy is to ask yourself the following questions:
Is the bot rather short, medium or long term?
Do I accept that one of my bots being blocked for a long time?
Am I willing to take a lot of risk?
How is the market behaving? (Bull, Bear, Range…)
Tips :
Loss management strategies can be applied either on an entire bag or bot by bot, depending on the degree of customization desired.
Description of the different strategies:
Disabled stop loss:
By default, Disabled stop loss strategy is active. Robots wait to sell for profit.
Selecting a “Disabled stop loss” strategy
When this strategy is selected, the bot will apply its trading strategy regardless of rapid market fluctuations. This makes it particularly vulnerable to a sharp drop, but on the other hand it is not likely to sell too soon following a market retrace.
Ex: USDT / BTC pair, time interval 1 hour.
The Robot will buy or sell according to these own indicators.
Market analysis will take place at each candle close.
The robot will follow its strategy according to these indicators, it will buy and sell according to and will never place a "StopLoss".
Example of an HNT / USDT chart with a time interval of 1 hour between each candle.
Benefits :
- The robot will never sell at a loss.
- No risk of selling too quickly following a retraced of the market before a rise.
- It is with this strategy that the biggest profits can be made!
Disadvantages:
- If the market falls sharply, the robot may not sell and will remain stuck until the market goes up.
- Possibility of ending up with a useless and worthless token if the token never goes back.
Cut losses according to a percentage:
This strategy is well known to cryptocurrency traders. It consists of reselling the tokens purchased if the market drops too much. To configure it, you must select the “Cut losses according to a percentage” strategy and then indicate the percentage of loss accepted. If the value of the token drops by the percentage indicated, then the robot will place a sell order. Be careful, you have to understand that this makes you lose money! This strategy therefore serves to limit losses.
Selecting a “Cut Losses By Percentage” strategy set to 10%.
Example for a setting at 10% with a time interval of 1 h :
Every hour, at the close of the candle, the robot looks at the market. The robot detects a bullish movement, it buys.
For simplicity, let's assume that we have just acquired 1 Bitcoin (BTC) at a price of $50,000 (USDT):
If all goes well, the bot continues its trading strategy and resells when its indicators tell it to exit the “trade”.
On the other hand, if the market drops suddenly and sharply after the purchase, the bot will probably not have time to react, the “StopLoss” is triggered if the market drops 10% from the purchase price. A sell order is then sent to your exchanger.
Benefits :
You yourself set the acceptable loss on your bot's “trades”.
No risk of selling too quickly following a retraced of the market before a rise.
You cannot end up with a worthless “token” after a sharp fall in the market.
Disadvantages:
Deadweight loss possible, which is always very unpleasant!
Tips :
In the case of using a loss management strategy, the bots “check” the state of the market 10 times per time interval, in the above case the market is therefore checked every six minutes.
Keep your initial trade amount :
As the name suggests, this strategy aims to secure your investment by selling at the buy price if the market becomes threatening (plus your exchange fees). To choose this strategy, enter “Keep your initial trade amount” then indicate the percentage of profit that the bot must make before placing the “StopLimit” order.
Example of a configuration with loss management set to “keep your initial trade amount”.
Example for a setting at 10% with a time interval of 1 h, SOL / USDT:
Every hour, at the close of the candle, the robot looks at the market. The robot detects a bullish movement, it buys.
Until the bot reaches 10% profit, the "StopLimit" order will not be placed.
A little of math now: The bot bought SOL at $100 (USDT), SOL continues to rise and hits $115 after six minutes. With the plus 10% profit condition being met, a “StopLimit” order is placed at the purchase price plus the exchanger transaction fees.
After that, either the bot closes its “trade” on its own as its indicators tell it to exit profit, or the market collapses and the “StopLimit” order is executed. You have therefore recovered your initial stake.
Tips :
Be careful, however, in the event that the market is bearish without having reached the required profit percentage, then no "StopLimit" order is placed, and the bot may end up below its buy price.
Benefits :
- You secure your investment by limiting possible losses.
- The bot will never sell at a loss.
Disadvantages:
- If tracing market, the bot can get out too early from the "trade".
- If the market falls before the chosen profit percentage is reached, you are not protected by the "StopLimit" order.
Secure your benefits :
This strategy aims to protect your gains progressively. To apply it, choose the "Secure your benefits" loss management, then indicate the minimum profits to be protected as a percentage.
Secure your benefits example
Example of a configuration with loss management set to "secure your benefits" with a setting of 0.25%.
The operation is then as follows:
Every X% multiplied by 2, a "StopLimit" order is placed at X% profit. X being the percentage chosen during configuration.
Example for a 5% setting with a time interval of 1 h, DOT / USDT:
The DOT token achieves a tremendous feat and gains 10% in value in 1 hour from its purchase price. Its setting being at 5%, we then reached the threshold of twice the setting (ie 10% profit). A "StopLimit" order is then placed at 5% profit.
If the market falls back to 5% profit over the buy price, then the sell order will be executed.
Benefits :
- Secure your profits as you go by protecting yourself from a sudden fall.
- The bot will never sell at a loss.
Disadvantages:
- If tracing market, the bot can get out too early from the "trade" but profits will be insured.
- If the market falls before the chosen profit percentage is reached, you are not protected by the "StopLimit" order.
Example of a bot applying a "secure your benefits" strategy in increments of 0.25% of profit. Here 0.5% of profit is already secured.
Tips :
In my opinion, this is the best strategy when the market is in the "Range" phase. Your profits will be less due to the retracing, but they will remain profits!
Practical implementation of a strategy:
Strategy on the whole bag:
From the Whalinvest home page, click on the button: Bag modification button
Then click on the "Edit robots" checkbox, the interface below appears:
The advanced editing window for a bag.
Then click in the gray box "Loss management" and choose the desired strategy, then click "Save". The loss management strategy chosen then applies to the entire bag. Depending on the strategy chosen, you may have parameters to define.
Strategy on a single bot:
To access the desired bot, click on the button:
of the bag containing the bot to customize.
Then on the bot window, click on
, then select "Edit robot" from the menu that appears. The interface below appears:
Advanced bot modification window, here the bot is configured with the "Secure your earnings" strategy
Select the desired loss management then click on the "Save" button. Depending on the strategy chosen, you may have parameters to define. And there you have it, the loss management strategy is active on your bot.
This is the end of this article on choosing and configuring the loss management strategy. If you enjoyed my work, please follow me and like the article. Your constructive comments are always welcome.
You can join Whalinvest while supporting me in my creative process by joining them via my referral link.
https://www.whalinvest.com/register?referralCode=3AA6TH68PB
This article is the fourth in a series on my experience with Whalinvest which will be available in English and French. Please do not hesitate to send me your comments. Thanks for the reading.