Starting to trade crypto with a bot sometimes may be a little bit tricky. Choosing a strategy, setting up orders, activating (or not) different technical indicators and trading tools – all these steps can confuse less experienced traders. But before digging into details it is important to understand overall principle of how the bot works and executes the strategies. Currently, there are 2 strategies on TradeSanta: long and short. Your choice between them defines, whether your bot will buy coins and sell them later or vice versa. Let’s have a closer look at the specifics of how these strategies are realized in TradeSanta.
Basically, long strategy means buying tokens that are expected to increase in value and selling them later at higher price. Let’s say, that you want to trade Ethereum and Bitcoin (ETH-BTC) and for the sake of an example let’s imagine that current BTC price is 1000 ETH. You have 10000 ETH to trade and would like to make a 1% profit on each deal. So, how the entire process looks like on TradeSanta?
Every deal starts with the first order. Let’s say you’ve decided to set the volume of the first order as a fixed amount – 1000 ETH. When entering the market, the bot will spend these 1000 ETH to buy 1 BTC. As our aim is 1% profit, the price must reach 1010 ETH. If you read the market correctly in the best case scenario after you entered the market and bought your BTC volume, the price goes up and soon reaches the desired price. As soon as it happens, the bot will sell 1 BTC for 1010 ETH and you will get your profit.
However, there is another option: instead of going up the price can go down right after you bought desired volume. And here is where extra orders come in play. Let’s say, in our example the price does go down. In this scenario if you buy additional volume of BTC BUT at a now lower price this gives you a chance to get the desired take profit with a smaller price’ bounce back. Here is how it works. You can set up step of extra orders, maximum count and count of real-time extra orders. Let’s say, the step will be 1% and both counts (maximum and real-time) will be 4. It means that the bot will place 4 extra orders immediately after launching the deal and buy additional BTC if the price drops by 1% and further, i.e. to 990, 980, 970 and 960 ETH respectively. The point is that if all 4 extra orders are executed, now in order to get 1% take profit that you desire you no longer have to wait for the price to get to 1010, now it has to bounce back to just 989,8 ETH. In other words, buying additional coins cheaper makes it possible to get desired take profit with a smaller price change in the future.
Short strategy originally implies borrowing assets to sell them and buy the same amount later at a lower price. But on TradeSanta it’s a bit different: short is much similar to long strategy but reversed. Let’s take our pair from the first example (ETH-BTC) with the same price (1000 ETH for 1 BTC). You have 10 BTC (because bot will sell BTC for ETH) and want to make 1% profit. Volume of the first order is 1 BTC and extra orders have the same settings as above.
First of all, the bot enters the market by selling 1 BTC for 1000 ETH and placing 4 extra orders. If the price decreases to 990 ETH, your bot will buy 1 BTC back, plus you’ll have 10 ETH as a profit. But if the price goes up, additional BTC will be sold for 1010, 1020, 1030 and 1040 ETH on each extra order. After that the required price for 1% profit will be 1009,8 ETH instead of 990, which makes it easier to reach.
So, these were the basics of how our bots work. Bots are an excellent tool when it comes to trading, because they are able to save you a great amount of time and effort. Hopefully, after this brief guide on our strategies it will be easier for you to start using TradeSanta, even if this is your first trading experience.