It is very important to determine the safe size of the deposit that will be used in trading. A common mistake of beginners is to overestimate the amount allocated to the bot, as a result of which there is a rapid loss of funds due to the liquidation of its position.
Depending on the type of margin used on the trading account, different recommendations are used.
If you are trading on an Isolated margin, then the amount of liquidation losses (which is approximately equal to the bot’s deposit in this case) should not exceed 1% of the trading account balance.
The same rule applies to bots on Cross margin with a Stop Loss. The estimated amount of Stop Loss losses must be determined in advance (use the Preview window in the bot editor or backtests), and it should not be higher than 1% of the trading account balance.
If you trade on a Cross margin without a Stop Loss, the calculations will be a little more difficult:
1. Run a backtest for your bot for the maximum period available to you and look at its MAE (Maximum Adverse Excursion).
How to run a backtest correctly and read its results is described in our article.
2. Using the matching method, set the bot’s deposit/leverage ratio so that the MAE is about 2 times less than your full trading account balance.
3. If you have several bots, their deposit/leverage ratios should be such that the sum of all MAEs is 2 times less than the balance of the trading account.
In general, we strongly recommend setting up a deposit/leverage ratio in strategies in which the MAE will be less than the deposit allocated to the bot.
If you do not know which trading pair to choose, we can recommend using fundamental coins such as BTC and ETH in trading, or trading only coins from the Top 20 coinmarketcap.com.
We do not recommend to use small Overlap % values. Study the chart of a particular coin and its behavior during periods of market drawdown in order to choose the optimal working percentage of the price move.
Use more filters for the bot’s entry point (placing the first purchase order).
