This is part 7 in a series of articles on the Nefertiti trading bot. If you don’t know what Nefertiti is or does, please refer to part 1 in this series.
Nefertiti includes a trailing strategy. If you want to use this strategy and lock in profits, here’s how to set that up:
./cryptotrader sell --exchange=Binance --strategy=1
In this article, I’ll try and explain how Nefertiti’s trailing strategy works, and what results you can expect.
Step #1: a limit sell 10% above the buy price
When the sell bot is running, it is waiting for buy orders getting filled. Once that happens, it will automatically place a corresponding limit sell order. With the trailing strategy, it will place a limit sell order 10% above your buying price. This limit sell order is merely placed as a reference; this order is not supposed to get filled. However, should the ticker price rise very rapidly, then there is a possibility that this limit sell order does get filled. You then make 10%.
Step #2: the sell bot is monitoring the ticker price
While the sell bot is running, it is keeping an eye on the ticker price. Should the ticker price near the limit sell order, the bot will then cancel the limit sell order, and then place a stop loss order *under the ticker price*. You have now locked in a 2.5% profit.
Step #3: the sell bot is moving up stop loss orders
The sell bot keeps monitoring the ticker price. Should the ticker price deviate more than 5% from the stop loss order, the sell bot will then replace the stop loss order with a new one, hereby locking in more profits.
Here’s what you can expect from the trailing strategy. Best case scenario, the sell bot will keep moving the stop loss order up and lock in more and more profits. We cannot predict what you will make, but it will probably be more than 5%.
2nd best scenario, the ticker price is moving up very rapidly before the sell bot has found the time to replace the initial limit sell order with a stop loss order. You will make 10%.
3rd best scenario, the ticker price drops pretty soon after the sell bot has placed a stop loss order. You will make 2.5%.
Worst case scenario, the ticker price drops immediately after your buy order was filled, below your buying price. You end up with a bag.
In our Telegram group, we sometimes get asked about how to configure the trailing strategy. Before you deviate from the above percentages, a word of warning.
Please do not underestimate the volatility of these markets. In practice, what you will see is that every now and then, the initial limit sell order gets filled before the sell bot has found the time to cancel it and replace it with a stop loss order. If you place these orders closer to each other, things will get more hectic and you will miss out on the potential of the trailing strategy.
That being said, here’s how to configure the trailing strategy. The sell bot supports an optional argument named
--mult. This argument is the multiplier and it defaults to 1.05 (aka 5 percent).
With the standard (built-in) strategy, this argument tells the sell bot where to place limit sell orders. Should you be interested in a 2.5% profit (instead of the default 5% profit), then you will probably want to do this:
./cryptotrader sell --exchange=Binance --strategy=0 --mult=1.025
With the trailing strategy, this arg tells the sell bot where to place the stop loss order, and when to move that order up. Should you be interested in moving up the stop loss every time it deviates more than 2.5% from the ticker price, then you will probably want to do this:
./cryptotrader sell --exchange=Binance --strategy=1 --mult=1.025
Please note that the above will place the limit sell and the stop loss order closer to each other (compared to the default 5% distance). Because these markets are very volatile, your stop loss order might get filled pretty fast. You risk loosing out on the potential of the trailing strategy.
Nefertiti is freeware. But if the bot is making you money, then I’d appreciate a BTC donation here:
Your donation will improve the bot and keep this project moving forward. Thanks!
Disclaimer: investing in crypto is high risk. Never spend money on crypto you cannot afford to loose. Use crypto bots at your own risk.