If the PnL in your deal turned out to be far from the take profit, you can resort to manual averaging – this will bring the average price of the position closer to the current price level. To best average the price, you will need to multiply the position volume (x2, x3, x5, etc.). Funds for averaging are taken from the free margin on the trading account, in excess of the deposit allocated to the bot. This is also why it is necessary to leave more funds in the supporting margin on the account – so that there is something to average in case of drawdown.
Example:
There is a long deal for 10 coins, the entry price is 4 USDT (we planned to sell for 5 USDT).
But the price has fallen and now ranges from 2 to 3 USDT per coin.
Then we create a purchase averaging order for 30 coins at 2 USDT. If the order is executed, our deal becomes 40 coins with an average price of 2.5 USDT. Therefore, our breakeven point turns out to be in the middle of the corridor, and we can close the deal without losses (or wait for a take profit, which will become much closer).
Reference:
The formula for averaging the price of a coin.
C = (K1 * C1 + K2 * C2) / (K1 + K2)
C is the price of the coin after averaging
K1 – the amount of coins in the first order
C1 – the price of the coin in the first order
K2 – the amount of coins to be purchased for averaging
C2 – the price of the coin when averaging
(10 * 4+30 * 2) / (10 + 30) = 100/40 = 2,5
There is a risk that after buying at 2 USDT, the price will not even reach 2.5, but will go even further from the desired one, and averaging will only worsen the problem – your free margin will decrease, the liquidation price will approach (in case of tradind Futures). Therefore, sometimes it is better to leave it as it is – and wait for the price reversal.
It is recommended to perform all averaging for deals that are in drawdown after a qualified analysis of the charts. For example, sometimes an averaging order can be placed in the support/resistance zone to which the price is moving, and they try to get the estimated new deal price so that it is reached after a rebound from the zone.
The “Add order” button on the deals’ card (“Active Deals” page https://veles.finance/cabinet/deals) allows you to add an averaging order to the deal manually. The bot offers the price and quantity of the coin for the order according to its parameters – but it is recommended to set others values according to your analysis and calculations.
Be careful – it will be impossible to delete an unsuccessful order without stopping the bot with an error!
If the order is deleted on the exchange, the bot will get up with the error “Orders were deleted by the 3rd party”. If such a deal is restarted, the bot will restore the same order, since it has become part of this deal along with all grid orders.
In the pop-up window, set the price at which the averaging order will be placed and choose the number of lots (coins of the base asset).
This option gives you flexibility in managing your trading operations and allows the bot to adapt to changing market conditions.
In the dialog box, you will also be able to see the balance available on the exchange, the current position size and the average price. When changing the values in this menu, the estimated position size and the estimated average price will be indicated, taking into account the additional order.
Also read our article: What is position averaging?
