How to compensate your losses on the price dropdowns with SCALPER BOT?
Scalper bot refers to HFT (High-Frequency Trading) - a type of algorithmic trading with a high speed of trades execution. It is designed to benefit from any tiny price movement. Bitsgap’s new and highly efficient software infrastructure allows all clients to get access to this technology.
During tests the Scalper bot is offered only for a few exchanges. By the end of the beta-testing period, other exchanges will be added, respectively.
"Grid" as a way to control the price movement
The use of the “Grid” technology allows us to set both limit sell and limit buy orders within a minimal distance from each other. This way all orders are executed regardless of how strong the price movement because these orders are always present in the order book.
The illustration above reflects the high-frequency trading of the Scalper bot. As the price moves upwards, bot accumulates the profit by selling the base cryptocurrency. In the case of the market crash, bot minimizes your total loss as it still keeps generating profits, which offsets the negative Investment change effect.
Advantages of the Scalper bot
There are two main Scalper bot goals:
- Maximize the profit in the market uptrend which will be followed with automated trailing.
- To compensate losses in the downtrend (-40% from the upper limit border where we average the purchase cost and keep the bot working on the lower levels).
The more severe is the market crash, the more intense the loss compensation from the bot becomes. The screenshot below demonstrates the bot launch:
By default, the Scalper bot creates 200 orders, where part of them are placed around the starting price to ensure high-frequency trading. It gives a bot an option to generate profit from even a tiny price movement and keep the bot stable and running in case of the price fall.
The illustration above demonstrates the Scalper bot work in a situation when the price of the coin initially started to fall, then bounced back to the starting point and followed the price movement by adjusting all open orders for a new market condition. In this scenario, we have utilized our cost averaging feature to buy more base currency at a lower price with the goal to generate profit from trend reversal.
The Scalper bot utilizes both base and quote currencies of a chosen pair. The investment value and investment change are estimated in a quote currency which is a primary indication of the bot performance - as the main idea is to maximize the return of the quote currency by using the coin you would normally hold for a better price. The first listed currency of trading pair is determined as the base currency, and the second ticker is called the quote currency. For instance, in ETH/USD pair the quote cryptocurrency is USD (used to show you the total investment, investment change, and bot profit), and the base currency will be ETH (the currency we are trading).
The Investment change parameter - is the estimation of how much you have invested in the bot and how much your investment plus a bot profit is worth right now, in the form of the quote currency. Let’s take another example: if you start the bot with a 1000$ investment and the base currency price drops and now the current investment value is 950$, then the Investment change is -5%.
How does the bot compensate losses?
Needless to say, almost all cryptocurrencies are highly correlated to each other and hence are affected by the simultaneous price change, including top-10. You can clearly see this in the picture below:
As mentioned above, The Scalper bot not only accumulates profit but also minimizes losses.
Let’s take a look at a fictitious trading pair COIN/USD to demonstrate the loss minimization effect.
In our example we have 5 Buy limit orders where each has $200 investment, so the total investment for this bot is $1000. When we started the bot, the COIN price was $100. Now let’s see what happens if the price drops to $95 - normally you would believe that the loss is -5%, but the real picture is different.
A one-time purchase Investment change of COIN is:
(950-1000)/1000 * 100% = -5%
A breakeven level in this case is 1000/10 = $100
5 Limit BUY orders were executed:
$200/$99 = 2.0202 COIN
$200/$98 = 2.0408 COIN
$200/$97 = 2.0618 COIN
$200/$96 = 2.0833 COIN
$200/$95 = 2.1052 COIN
As a result, the total amount of the base currency is now 10,3113 COINs. At the 95$ COIN price, the total value in a quote currency is estimated as 10,3113 * 95 = 979.57$
The Scalper bot Investment change is:
(979.57 - 1000) / 1000 * 100% = -2%
A breakeven level in this case is 1000/10.3113 = 96.98$
As the Scalper bot bought COIN at a better price using cost-averaging feature, the total loss is only 3% (Note, that in this case the bot’s profit generation is not taken into consideration. Otherwise, the total loss compensation would be even more as the profit generation together with a cost-averaging effect would offset the loss). In this occasion, if the generated profit would be 8%, then the total offset effect of the Scalper bot would be 11%
Scalper bot: Start and Monitoring
You can start the Scalper bot in just one click. All you need to do is enter your total investment and hit the Start button. Our system will use the backtesting and your available balance to adjust the grid settings accordingly so you don’t have to worry about it.
You will need to have either base or quote currency to start the bot. If required our bot will automatically purchase any missing amount at the best available price. Please note, that for the auto-rebalancing we will use only the quote or base currency of the chosen pair. Any other coins on your account are not involved.
Quick example: If you start the COIN/USD bot and you don’t have enough USD balance to place buy orders - then the bot will sell part of your COIN at the best available price to receive the missing amount of USD.
The Scalper bot is your investment safety tool, which secures your assets when the market crash happens, and generates profit when the market rises. This bot is fully automated and does not require any monitoring, which makes it perfect not only for beginners but for experienced traders as well.
Scalper bot is available for all Bitsgap paid plans (Basic, Advanced, Pro) without trading volume limitations. New users will get a 14 days trial upon sign up to test all the Bitsgap platform functionality.