Long - buy lower, sell higher
The bot opens a new deal according to one of the conditions that are available for selection during the creation. After that, it immediately puts a coin for sale. If the price rises and the order gets filled, the profit goal is achieved. In case of a price fall, the bot places safety orders below the purchase price every X%. Every filled safety order is averaging the buy price, and it makes possible to move the TakeProfit target lower and close the deal without losing profits on the first price bounce. Buy one coin at $10 then sell it at $11. It makes a profit from the difference in prices as you get more after the sell. $11 got against $10 spent.
- Buy initial part of coins.
- Place a sell order.
- Place safety buy orders.
- In case of safety orders get filled update sell order.
- Cancel safety orders and calculate profits after the sell if finished.
Important: coins from the left part of a pair are required for the Long algorithm to work. BTC_ETH, BTC_ADA - BTC; ETH_XRP, ETH_ADA - ETH and so on.
John has $1000, and he wants to get another $10. John likes the ETH coin and starts a bot on it. Now he can go to sleep or watch what happens to make $10:
- The current price is $500; the bot buys 0.2 ETH for $100.
- The bot places a sell order at $550. Why? As we bought ETH for $100, there should be a profit of 10% to make $10. $550 is exactly 10% higher than $500. If it sells, John will make $10.
- Bot places safety orders each $100 in size at rates of $450, $405, $364.5. Each order lower than previous one. The first order is 10% lower than the buy price; the second one is 10% lower than last and so on.
- The price drops to $440, so the first safety order gets filled. 0.2222 ETH was bought at the rate of $450 ($100/$450). Now the bot has 0.2 + 0.2222 = 0.4222 ETH and it's spent $200 to buy this amount. Average buy price now is $473,7 ($200 / 0.4222 ETH). The bot still must make $10 profit, which is 5% from $200, the current amount spent on position. Bot moves TakeProfit from $550 to $497.4 (+5% from average purchase price $473,7). If this order fills, the total will be 0.4222 ETH * $497.4 = $210. John receives $10.
- If the price goes down to the next safety order, the bot is going to repeat same actions as in the previous step to sell coins at the first price bounce up.
Short - sell higher, buy lower
It's a reversed version of "Long" algorithm. Sell one coin at $10 then repurchase it at $9. It makes a profit from the difference in prices as you spend less to repurchase. $9 spent against $10 got.
- Sell initial part of coins.
- Place a buy order.
- Place safety sell orders.
- In case of safety orders get filled update buy order.
- Cancel safety orders and calculate profits after the buy if finished.
Important: coins from the right part of a pair are required for the Short algorithm to work. BTC_ETH - ETH, BTC_ADA - ADA, ETH_XRP - XRP and so on.
John has 1 ETH; he wants to make $10. You can imagine that John has bought his ETH before price drop and now the position is at a loss. He doesn't want to sell it and freeze this money, so he can use "Short" bot algorithm to make some cash before ETH price rises back. John starts short bot on USD_ETH pair and watches its actions:
- The current price is $500; the bot sells 0.2 ETH for $100.
- The bot places a buy order for 0.2 ETH at $450. Why? As we sold ETH for $100, we should repurchase it 10% cheaper to make $10 in profit. $450 is exactly 10% lower than $500. If it fills, 0.2 ETH will be bought for $90. John now has 1 ETH and $10 of profits as initially 0.2 ETH were sold for $100 and now only $90 has spent to repurchase it. $100 - $90 = $10.
- Bot places safety orders each 0.2 ETH in size at rates of $550, $605, $665.5. Each order higher than previous one. The first order is 10% higher than the sell price; the second one is 10% higher than last and so on.
- The price rises to $580, so the first safety order gets filled. 0.2 ETH was sold at the rate of $550 for $110. Now the bot has sold 0.2 + 0.2 = 0.4 ETH for $210. Now the bot should buy 0.4 ETH and leave $10 in profit, so using only $210 - $10 = $200. It needs to buy ETH at rate $200 / 0.4 = $500 to achieve this. Bot cancels current buy order and places a new one for 0.4 ETH at $500. John receives $10. If it fills, John will return his 1 ETH and make $10.
- If the price goes up to the next safety order, the bot is going to repeat same actions as in the previous step to buy coins at the first price bounce down.
Important: both algorithms will make profits in the pair that stands in left part. BTC_ETH, BTC_XRP, BTC_NEO - BTC; USDT_ADA, USDT_EOS, USDT_LTC - USDT and so on.