Hi, just arrived at Gainium and have been paper testing the Combo Bot some. It seems to me that it would work great for accumulation, except for one cavet. It needs to be able to move the grid also down.
The idea is that when the price drops below the grid, then the bot should purchase crypto for all USDT and rebuild the grid from this point forward.
The benefit is you can trade more equity in a narrow range without worrying about entering the forever waiting zone.
Well, adding more DCA requires more liquidity, meaning you need to invest more of your BTC, in case that is what you accumulate. The condition here is that you have more BTC laying around.
If instead, all the USDT that has been received during the selloff, is used to buy BTC, two things are achieved. There is no need to invest more liquidity, and the deal can be closed (realized) and a new one started.
I am not sure how smart orders solve this, but I assume we are talking about investing more, so in that case, not quite the same.
Let me draw an example. If trading BTC, use a narrow grid of maybe say 10%. This makes it possible to utilize your funds more efficiently, for better profits. Once the price drops 11% from the entryPrice, buy BTC for all USDT and start a new deal. The effect is that BTC has been accumulated at a lower cost. The exact gain depends on how long the 10% grid is traded, but it isnt unreasonable to see good gains here. The best benefit of all is of course that you will never end up in a situation where you have to wait for the price to go up for the deal to close, and loose out on so many opportunities.
Add to this a thought. What if when the price goes up, instead of using a base grid to sell off, just hold your BTC and rebuild the sell off grid each time the price goes up say 1%. This way you basically never sell/buy unless the price goes down.
The main idea is to accumulate coins, so the prerequisite here is to trade USDT to gain BTC (for example). As the price drops below the lower grid, we will be holding only USDT because all BTC has been sold off. At this point, spend all USDT to buy back BTC at a lower price, close the deal (or round or whatever it is called) and start again with a new grid below the new entryPrice. If the price goes up, do nothin except rebuild the grid at higher levels (basically HODL), but if the price continues down, continue the sell off and trade, etc.
So to answer your question, yes.
A vital key to this consept is to always remain in trade, in a rather narrow optimized range. It is really a set and forget accumulation strategy, without having to add additional funds.
I’m struggling to understand the concept. If the price drops under the grid you’re all in bitcoin, and you would need to use extra quote to buy bitcoin and create another grid. Is the same as adding dcas.
The profit currency needs to be BTC. I am not quite sure how your combo bot works in that regard. The idea is to sell bitcoin going down so you are all in USDT, not Bitcoin. I suppose conceptually that would be trading USDTBTC.
So you start with BTC. You open a kind of “short” combo grid that converts BTC to USDT for the base and DCA grids. If the price drops out of the lowest DCA grid, you want your deal to restart again. That is, you want to execute a stop loss, that rebuys BTC and starts a new combo deal?
Sounds about right except the word stoploss indicates realizing losses, which this is not about. Lets try again with an example.
Invest 1 BTC
Trade long/spot in a 10% grid which is below the entryprice (or price when bot starts)
While in grid, the bot will generate BTC from selling high and buying low
If the price drops below the grid, all BTC has been sold and USDT remain
At this point, buy BTC for all USDT, and restart the bot//round/deal
If the price goes above the grid, you hodl BTC while trailing the grid below upwards.
This is the theory at least. The only challenge I can see is if the price drops a little at the top, a BTC sell is executed, and then price goes back up. For this even, a small takeloss (repurchase) would need to exist for the traded part, but that’s what backtesting is for right?
I would like to point out that from testing it seems the combo bot is doing all of this already, except for the automatic “restart” below the bottom of the grid.
I don’t think your theory is correct. You don’t make money in spot by selling on the way down, only on the way up. If you sell on the way down you will be realizing loses.
A long spot combo deal requires you to start with USDT in your wallet. The base grid converts part or all of it into BTC and is selling it on the way up. Only if you reach the upper limit of the base grid all BTC will be USDT again. If the price moves below the buy price and you haven’t any USDT left for DCA steps, you are stuck. Either you wait for the price to return or close your current deal at a loss to start a new combo deal. If you have kept or gained additional USDT of course you could also try to use DCA grids below. But at some point your USDT may be exhausted again if the price further declines. And again you have to decide wait or stop loss and restart or not.
The only way I can see this work is if you’re using something like bybit with a Unified Trading Account. you’d open a Short combo bot in Futures and instead of having USDT as Collateral, you’d use BTC. if the price goes up, the losses from the combo bot would be supportted by the BTC you’re holding in the trading account, and if the price goes down the combo bot would be accumulating a profit, if the grid is exited then buy more BTC for Collateral and start over, mabye even start compounding. this wouldn’t give you an immediate profit but it would accumulate more BTC for you to hold.
I used to do this with ADA 3 years ago and honestly I had forgotten that I was doing this. it worked decently, but I was new to trading and dipped out for a small profit, so I unfortunatly do not have results to show you.
I remember using something like 10% - 15% price range with 0.75% spread between orders. every time the price went above the grid with more than 2% I’d stop the bot (stoploss, but it didn’t matter becuase I had “won” (I don’t like this term) what I had lost from my spot holding) and try again.
While writing this I realize that you could even do different splits, becuase of leverage, so you could do something like 75% spot holding and 25% futures, using Leverage you could use less margin but still have the same amount of Assets.
I have no Idea if this is “winning Strategy” and please don’t come after me if this turns out to be a catastrophy