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How to Reduce Futures Trading Risks

Choosing the right deposit amount to allocate to a bot is a key factor. A common beginner’s mistake is setting the deposit too high, which, during an unfavorable market move, quickly leads to position liquidation.

Recommendations depend on the margin type and whether a stop-loss is used.

Isolated Margin and Cross Margin with Stop-Loss

Section titled “Isolated Margin and Cross Margin with Stop-Loss”
  • The liquidation risk or loss from a stop-loss should not exceed 1% of the trading account balance.
  • Always calculate the potential loss in advance (using the “Preview” option in the bot or via backtesting).

Cross Margin without Stop-Loss

Section titled “Cross Margin without Stop-Loss”
  1. Run a backtest over the longest possible period (preferably 1 year) including strong market dumps. Determine the MDD (Maximum Drawdown / Max Floating Loss / Maximum Adverse Excursion). Example of MDD in a completed backtest
  2. If the MDD is less than the deposit — keep Deposit × 2 in the account. If the MDD is greater than the deposit — keep MDD × 2.
  3. For multiple bots, the sum of all MDD values should not exceed half of the account balance.

General Recommendations

Section titled “General Recommendations”
  • Adjust deposit and leverage so that the MDD is lower than the deposit.
  • Distribute bots across subaccounts (5–10 per account).
  • Regularly withdraw profits to separate accounts.
  • Freed-up funds can be allocated to new bots or other purposes.

How to Reduce MDD

Section titled “How to Reduce MDD”
  • Lower the leverage.
  • Increase “% coverage” and “% martingale”.
  • Decrease the “Logarithmic distribution” parameter.
  • Use averaging based on indicator signals.
  • Add entry filters based on higher timeframes.
  • Restrict entries after sharp rises or drops.

Choosing a Trading Pair

Section titled “Choosing a Trading Pair”
  • Prefer BTC, ETH, or coins from the CoinMarketCap top-20.
  • Study the pair’s behavior during market dumps.
  • Don’t set “Price Change Coverage” too low.

Entry Point Filters

Section titled “Entry Point Filters”

Filters won’t guarantee protection from drawdowns, but they help avoid entering long at local highs or short at local lows.

Examples of Strategies and Risks

Section titled “Examples of Strategies and Risks”

High-risk, short grid (up to 10% coverage) — allocate minimal funds, be ready for long invests, use protection against entry after sharp moves. High-risk without supporting margin — use a separate subaccount, withdraw profits regularly. High martingale % and wide grid — modest profit in calm markets, strong resilience to dumps. Rare entry strategies — the bot waits longer for a signal, allowing many strategies on different coins to run in parallel. No filters — requires high martingale, wide grid, and large deposit.

Conclusion

Section titled “Conclusion”

Don’t risk blindly. First invest time in testing and setup, then invest money. The market will always give you opportunities if you approach it prepared.