How To Set Up The Allocation Of Your Trading Strategy
When you launch an automated trading strategy, you should make sure that it can run smoothly according to the current balances available. If you trade manually, you can see in real-time the funds available so that it can be easier to keep under control the amount that is tradable at that moment. One of the most important things you need to make sure to set up correctly your strategy is to define the amount of coins you want to trade and which wallet will be the Quote Currency of your rules. Follow these steps to input the parameters of your rule that fit the allocation of your automated trading strategy.
Check you balances
Before creating your rule, keep an eye on the funds that are currently available on the exchange. Bear in mind that even when you create a rule on the Demo Exchange, you need to respect the allocation available.
What coins are you willing to trade? Are there any coins you wouldn’t like to sell? How much of these coins would you like the rule to buy?
These are all questions you should ask yourself before moving to any further step.
Not all coins are the same
Let’s start by underlining that you can use some coins to trade directly other assets. For example, most of the coins on each exchange are traded vs Bitcoin or other stable coins. That means that you can buy Litecoin, for instance, with your BTC wallet on Binance, or with USDC on Coinbase Pro. On the other hand, if you only hold EOS and you want to buy Litecoin, you need to sell that coin to a wallet that will allow you to buy Litecoin.
These currencies that you can use to buy other coins are quote currencies, and you will find them listed (if available on the selected exchange) in the “wallet” dropdown. That will define what funds the rule will use for buy orders and where the proceeds of the sell orders will go.
The selection in this dropdown will also define how the bot will check the market conditions. The rule will be able to trade only coins that have a trading pair with the quote currency selected. In the example above, USDT. In case you have chosen an option such as “any coin” or “any of my coin”, bear in mind that the bot will only consider coins that have a trading pair with USDT.
In that case, you may want to select a wallet that allows as many opportunities as possible for your strategy. Fiat currencies, stable coins, or BTC are good options but always double-check on the exchange of what trading pairs are available.
Adjust your balances to fit your trading idea
You can also adjust the allocation of your automated trading strategy with a few clicks using a Direct order. There is no need of accessing your wallet on the exchange to buy or sell coins as you can do that directly on Coinrule.
You may want to use USDT as the quote currency of a rule, but you don’t own any coins yet. With a Direct order, you can buy the exact amount of USDT to run your strategy. Right after launching the order to the market (or simulated, if Demo Exchange is selected), you will find the new coins in your balance so that you can create a new rule.
If you think that the balance on Coinrule doesn’t reflect your actual allocation on the exchange, you can also refresh it on the dashboard in real-time.
Define the size of your orders
After setting up the best Quote Currency for your strategy, it’s now time to specify the size of the orders of your rule.
The most common options are:
- Percentage. Select this if you want to trade a fraction of all (100%) of your holdings with each trade. When the condition triggers, the bot makes a snapshot of your current holding at that time and calculates the specific amount to trade depending on the percentage selected.
In this case, the bot sells 20% of the balance of the selected coin when the condition is met.
In this case, the bot buys the selected coin with 20% of the current balance of USDT available when the condition is met.
- Specific amount. You may alternatively define the exact size of each order so that you can foresee precisely how much the bot will trade. If you specify an amount in USD terms, for example, the bot will calculate how many coins to trade based on the current market price at the time of the execution.
Each exchange sets a minimum size for each order allowed on the trading platform. Usually, the size is around 10-20 USD depending on the exchange. Make sure the amount you set up for your rules complies with such limits, so you don’t risk that the rule gets stuck with rejected trades.
Another common situation happens when the rule tries to trade coins that are not available anymore because another rule or a previous order traded them.
For example, when you use the operator “Any Time” and you sell 100% of the total balance of a coin, it possible to run out of coins to sell. You can read more about this operator here.
A typical case
– you buy multiple times the same coin
– in the following action, you set to “sell 100% of total balance of that coin”,
– if two sell actions are triggered immediately one after the other, the first order sells all the coin, and the following order doesn’t find any coins to sell anymore.
– Action 1 Buy 1 ETH at 200 (with following condition to sell 100% at price +10%)
– Action 2 Buy 1 ETH at 190 (with following condition to sell 100% at price +10%)
– Action 3 Sell 2 ETH (100% of current holdings) at 209 (190 + 10%)
– Ation 4 Sell ETH at 220 (200 + 10%) fails because all the coins were sold in the previous action.
To avoid that, you can set the second action with “sell 100% of amount bought of that coin“. In this way, the rule with always trade the same amount across different actions and that will significantly reduce the risk of running out of coins.
Remember that a trading bot is a smart tool that helps you implement your perfect trading system. It requires a careful set up so that it will trade the desired amount you expect, and it keeps running smoothly with no allocation issues for your automated trading strategy.
Follow these tips, and the trading bot will manage your funds with no stress!