The negative aspect of spot trading with bots is when the price in a trade has changed significantly and is not expected to return.
The bot has entered the trade, all the orders placed in the grid have been executed, and then the bot enters the Invest position, waiting until the price reaches the target order to complete the trade and bring the profit.
As a result, the traded asset decreased in price and the value of the initial deposit fell, when the bot bought the coin expensive and the price continued to fall (Algorithm Long) or on the other hand sold the initial deposit cheap and then waits for the return of the old price (Algorithm Short).
The bot can go into the state of Invest because of aggressive settings or because of an unsuccessful choice of trading pair. That’s why we always recommend using coins from the top 25.
What to do when the bot is in an invest state?
There’s no need to worry:
- If you did not make a mistake when choosing a trading pair, the price will return.
- Price changes +-30% is a standard market situation, so it is not recommended to use Price Change Overlap lower than 30-40%.
- You can deploy the bot algorithm so that the deposit is not idle until the price returns and reaches a profitable order, told in this article here.
What are the risks of trading in the futures market with a leverage
The main risk in futures trading is the liquidation of the entire balance on the futures wallet (margin call).
We recommend to observe the risks and calculate the settings in such a way to avoid such situations.
In our other article we will tell you how to reduce risks when using a futures bot.