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How to use Stop-Loss and Take-Profit

Managing profits and losses when performing a trade is key, and beginner traders do not use tools such as Stop-Loss and Take-Profit. The following article will introduce the reasons why you should learn how to use Stop-Loss and Take-Profit as soon as possible, and share some advice for beginner traders.

How to Manage Risk in Trading?

By far, the most important task of risk management is to preserve capital. You can make gains of 5,000% on your capital, but the loss will always be maxed out at 100%. And once you lose it, there is no way to make it back without funding the account again. Period. So when you manage risk properly, you are acting in your own best interest.

The type and way and style that you employ to concretely manage risk, vastly depends on what you are doing. But, it is also important to understand that risk in trading does not only come from having a position on.

There are other forms of risk for example:

  1. Operational risk in the form of an exchange going under, being seized over by the SEC, or simply getting hacked
  2. Systemic risk related to the stablecoin you might be using to trade 
  3. Credit risk where, if you get too leveraged but do not have enough liquidity in the account, you might be margin called to forbid you from defaulting on the position

Trading related risks can be easily mitigated with Stop Losses or different mechanisms available in your exchange or trading platform. Systemic and Operational risks are harder to mitigate, but it can be done in the form of diversifying yourself by being on multiple exchanges, and trying to use as many different stable coins as you can.

What is a Stop-Loss Order?

A Stop-Loss order is an order that stops the position when a certain target is reached. This is probably one of the most important types of orders in your risk management toolbox.

It can either be used to close a losing position, or, as in the case of a trailing stop, it can be used to let a winner run, but protecting the made capital with the Trailing Stop.

How to set a Stop-Loss?

This depends on the trading platform you are using, as well as the exchange. Some exchanges don’t allow stop orders in the traditional sense.  Here are the different ways to set a Stop-Loss while you trade crypto:

  1. If the platform supports then use it, but be mindful that these orders often take from the order book as it executes as a Market order. This will most of the times increase your fees.
  2. Some platforms offer ‘Reduce Only’ type of orders where you’d have to place an order on the opposite side with the same volume as your position, but with the reduce only flag. This flag is useful to make sure the order is executed only if the position is still open and it was not stopped/liquidated.
  3. In crypto futures trading, you have the possibility of using the ‘One Way Mode’ as opposed to the ‘Hedge Mode’. In ‘One Way Mode’ mode, if you set an order with the same size of your position, but in the opposite direction, when filled it will automatically close your existing position. If you want to have 2 different positions, one long on a bigger timeframe and another short on a smaller time frame, then you will use Hedge Mode.

Pros and Cons of Stop-Loss Orders

While a Stop-Loss can be a great way to protect your capital from taking massive hits, it comes with a big con. Essentially, and depending on how you set the location of the stop, this ‘protection’ can actually take you out of what would otherwise be a very profitable position.

As a matter of fact, Larry Connars argues that the use of a Stop-Loss is bad, and in his backtests, found that it does nothing but kill a winning position. Most of the statistics that we gathered inside Vestinda show that a small value for Stop-Loss is shrinking the returns. 

However, you can use a bigger value for a Stop-Loss for peace of mind and for the moments when the market really goes south. In crypto, usually something around 10-12 percent is a good value. There could be a middle ground found in using DCA (Dollar Cost Averaging) in order to swim out of a loser. But, you need to be mindful that this could exponentially amplify your losses.

What is a trailing Stop-Loss?

A trailing Stop-Loss  is not used to protect you from a loser, but rather to protect a winner from losing, when it gets past a certain level. Or to protect profits.

How to set a trailing Stop-Loss?

Nowadays, most if not all crypto brokers and exchanges do not offer an automatic trailing stop order. Traditional platforms like MT4 or cTrader might offer that feature if it is supported by the broker. But it often is limited in that it trails based on a change in pip in the direction of the position.

The best way to trail a stop depends on your strategy. First you need to define your targets. You can do it either with a simple formula or using an indicator such as the Average True Range, or Stochastic Indicator. Once the target is defined, you can either place the stop order manually, or use platforms that can do it algorithmically for you, such as Vestinda.

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What is a Take-Profit Order?

A Take-Profit order is an order to take profit once a certain price level is reached. It allows you to lock in the unrealized profits, and it is essentially the order that closes the position in green.

How to set Take Profit?

Setting a Take-Profit is very similar to how you would set a Stop-Loss, as described above.

The one thing to note is that on some exchanges, you can actually get paid a rebate for placing such orders, because, unlike Stop-Loss orders that take from the books, Take-Profit orders actually put liquidity in the book. You’d essentially become a market maker, and crypto exchanges tend to reward that. Something that traditional markets rarely if ever, do.

What is a trailing Take-Profit?

A trailing Take-Profit is very similar to a trailing Stop-Loss, but it activates only after the price closes above the target set for the Take-Profit. In a way it is a trailing stop that is activating only after the price closes above the Take-Profit price.

How to set a trailing Take-Profit?

Native exchanges do not offer this kind of feature yet. But you can find it on platforms such as Vestinda that add up to your trading toolset.

To set a trailing Take-Profit in Vestinda you will use the Trailing Stop Multiple Levels feature. It helps you manage different levels of stop based on the price appreciation. You can set multiple levels of stop based on how much the position has gained. Format is “5/3, 10/4”. First number is the profit activation level and the second number is the stop percentage. With this example, if the price appreciated with 5% since the entry point, then the stop is activated and set at 3%. Then if the price reaches a 10% appreciation (closes 10% higher than the entry point), the stop is changed to 4%. The position will be closed when and if the price moves against you with the current stop value. So, if the price closes 10% above the entry point and then it decreases 4%, the position will be closed.

Pros and Cons of Take-Profit Orders

Take-Profit orders are great to help you lock in the profit and ensure that your hard earned patience is rewarded. Knowing how and where to set it is an important element in order to define Risk Reward Ratios that can, along with win rate, tell you how profitable or not your strategy is.

The downside of a Take-Profit order is that it could take you out of the market earlier than expected, leaving much of the future potential profits on the table. Trust us, there is nothing more frustrating than seeing a potential 10:1 Risk Reward Ratio position closed at a poor 1:1 due to a fixed take profit. To mitigate this, you can use a trailing Take-Profit with multiple levels instead if available in your platform.

 

All in all, trading can make you uncomfortable if you don’t use protective strategies. Using Stop-Loss and Take-Profit orders can create a reasonable comfort level and secure your investing experience.

 

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Difference Between Market Order And Limit Order

One of the most crucial aspects of making a trade is determining the price levels at which the buying and selling of security will occur. Many traders use one of two methods to make this decision: The market order or limit order. In this piece, we will be diving into the order types, the difference between market and limit order, and how to use them. 

What is an order book?

Before diving into understanding the two different types of orders mentioned above, let’s get first a basic understanding of what an order book is. An order book is an electronic or manual list that shows the level of interest that investors have in a particular asset. 

When a trader seeks to execute a trade, they could request from a broker the need to trade an asset. That request is known as an order. When that order is made, it is then put in an order book. This order book contains a list of requests made by other traders for an asset. They are also arranged according to price levels. An order is known to be open if its trades have not been executed. Meanwhile, an order is closed if its trades have already been executed.

What is a limit order?

A limit order is an order type where trade is only executed when an asset reaches a specific price. This type of order has released traders from a bit of restriction. Traders now have the liberty to decide the price they would like to buy or sell an asset.

Unlike market orders, limit orders are not executed immediately. An order will only be executed when the target price is attained. They are suited for assets that are thinly traded and very volatile. Limit orders help to reduce risks that could come with such assets. 

A big downside to limit orders is that some orders might never be executed. If a trader has set their limit price on an asset and it never reaches that price point, execution will not be possible. 

How does a limit order work? 

If a trader wants to buy an asset, they can set a limit for the price they are willing to buy that asset. If the price reaches or falls below that point, the trade is executed. This is otherwise known as buy limit order.

Conversely, a trader interested in selling an asset at a higher price can set a limit to how much they are willing to sell the asset. Hence, if the price reaches or rises above the targeted price point, execution will occur. This is otherwise known as sell limit order. 

Let’s assume you want to buy the shares of X Company. But you feel the price of $240 is too high. Although you are still interested in buying the shares and will be willing to purchase them at $200. You can set a limit order so if the prices of the shares reach $200, you can purchase them. But keep in mind that if the shares do not reach that price point, the trade will not be executed. So you may need to monitor your open order and adjust the level according to market fluctuation.

 

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What is a market order?

A market order is an immediate order which is placed to trade an asset at a market’s current price. Simply put, you will pay close to or the requested ask when you want to buy a stock. Conversely, you will receive close to or the required bid when you want to sell a stock. This type of order is for people who are ready to buy or sell a stock at a given moment. Market orders are mostly preferred for trading assets that have good liquidity.

Market orders are the fundamental order type used in trading. This is because trade executions are instant and straight to the point. Many investors opt for market orders which is why there are always available buyers and sellers. 

Although they have their advantages, a market order can be unfavorable for a few reasons. The volatility of assets plays a major role in the stock market, and it could work either to the advantage or disadvantage of a trader. In the case of market order, volatility can cause great disappointment when buying or selling an asset.  

While executing a trade, there is a short time interval from when the trader hits the “buy/sell” button, to when the trade gets executed. During that time frame, stock prices could skyrocket or experience a massive dip. Assume a trader wants to buy an asset for $1000 when he hits the buy button. During the short time frame to get it executed, the price of the asset could increase to $1050. Hence, the trader ends up buying it for more than the previous market price. This happens more often in asset categories like Crypto where liquidity is not always the best for specific assets.

How does a market order work?

In the order book, pending limit orders are arranged according to price. The best ask price is the first in the Sell area of the book. While the best bid price is the first in the Buy area of the book. Obviously, the rate at which an order is executed depends on the price a trader pays. Orders with the best prices automatically get executed first. 

When a Market Order is sent to the Exchange, it gets executed according to each side of the Order book. If the Market Order is a Buy order, then it takes from the Order Book the first best asks, until it fills the volume it wants to trade. Same goes for a Sell order, it takes from the Order Book the first best bids from the Buy area.

Difference between market order and limit order

Even though market orders and limit orders share great value to various traders, they are still widely dissimilar. One might ask: How are market orders and limit orders different? Well, we will be analyzing that in this piece:

  • Speed of execution: Market orders are executed immediately and are suited for buyers and sellers that are ready to trade in an instant. Meanwhile, limit orders are executed only when the target price is attained.
  • Asset types: Market orders are mostly executed on assets of large caps and good liquidity. Even with their size, market orders offer the ease of quick trade execution. Meanwhile, limit orders are mostly executed on thinly traded assets. This is because they possess high volatility. Hence, limit orders help to gauge that volatility and limit risks.

How to use limit order and market order in crypto markets?

It is obvious that both order types are suited for their specific types of traders, and the types of assets traded. This is why you should know how to use either the crypto market order or the crypto limit order. You should also understand the right moments and situations to use them. 

Here is how to use a crypto market order:

  • You should use a market order when you want to sell or buy an asset immediately. If you are fine with the current market price and willing to make your trade at all costs, the market order is the best option. 
  • Market orders are also an amazing option for assets of high liquidity. It is also beneficial when the bid-ask spread of the asset you are trading is significantly low. 

Here is how to use a crypto limit order:

  • You should use a limit order when you have a specific price in mind. If you feel like the value of that asset would reach a certain price level, then you can go ahead. 
  • Unlike market orders, limit orders are better for illiquid assets. Also, they can be very helpful if you want to trade a large number of shares. 

How do market order and limit order work in Vestinda strategies?

Order types are essential to the performance of your trades. This is why it is important to be well-informed on different order types before executing a trade. 

While using automated strategies with Vestinda to improve your trading experience and save time, you can choose to either use LIMIT or MARKET orders when the platform is placing the orders.market and limit order

A LIMIT order is used to buy or sell at a predetermined price and will not execute unless the price meets those qualifications. The price determined by the platform is one that goes in the Order Book in front of all the other orders that exist already. For example, if a new long Position is being opened then the LIMIT order will be sent to the Exchange with a price between the best bid and the best ask price, closer to the best bid. 

A MARKET order is trying to find the right price in the Order Book to increase chances of getting filled. 

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Best Indicators for Crypto Trading to try out

Trading indicators are essential trading tools used to gauge past and present financial trends. It is no news that predicting the outcome of future trends in the market can be very challenging. But with the right indicators, this task can be made easier. This piece will be exploring the best crypto trading indicators you can use to improve trading. 

What are trading indicators?

Indicators are used by traders to provide more clarity on market trends. The use of indicators has served as a profitable trading strategy. It takes data from the previous state of the market and uses them to predict the future market state. 

A trading indicator can either be: leading or lagging. Leading indicators predict the price action of a trade while lagging indicators show previous reports of a trade. Both indicators can be merged and employed to make trading decisions. 

What are technical indicators?

Technical indicators are patterns that traders use to predict price movements. As a trader, you may use technical indicators to understand the way price movements work in the market. 

The accuracy of technical indicators is questionable without a doubt. This has struck a question to technical analysts: Do technical indicators really work? When it comes to crypto technical analysis indicators, accuracy is not 100% guaranteed. But the goal is to have more accurate predictions than inaccurate ones, obviously. Once that is accomplished, technical indicators can create winning strategies. 

What are the best crypto indicators for technical analysis?

Regardless of the numerous trading indicators, people still look out for the one that is just right. Choosing the best technical indicators for bitcoin, ethereum and other crypto assets can greatly improve the accuracy of price predictions and overall trading performance. 

Here are the best indicators for crypto trading you can use:

Moving Average Convergence Divergence (MACD)

What is MACD?

MACD is an acronym and stands for Moving Average Convergence Divergence. MACD represents the average price of an asset over a particular period. 

The two types of MACD are simple moving average (SMA) and exponential moving average (EMA). Calculating a simple moving average requires you to find the average of prices of securities through a particular time frame. The EMA, on the other hand, is calculated in a similar way. The difference between these two is that EMA places more emphasis on recent prices. 

How to read a MACD chart?

Here are a few things to note when learning how to read a MACD chart:

  • MACD comprises three major lines: MACD line, signal line, and zero line. 
  • There is an uptrend when the MACD line rises over the zero line.
  • There is a downtrend when the MACD line falls below the zero line.
  • A bearish movement occurs when a MACD line dips below a signal line. A trade is said to be bearish when there is a continuous decline in price action. This is an indication that a trader should sell to avoid further losses.
  • Conversely, a bullish movement occurs when a MACD line rises above a signal. A trade is said to be bullish when there is a continuous rise in price action. This is an indication that a trader should sell to make returns.

Relative Strength Index (RSI)

What is RSI?

RSI is an acronym that stands for relative price index. It is an indicator that evaluates past and current price movements to determine securities that are overbought or oversold. 

An asset is said to be overbought when it has experienced a rapid uptrend within a short period. This occurs when the demand for an asset increases. The rise in demand thereby causes a relative increase in price that rises above the upper band.

An asset is said to be oversold when it has experienced a rapid downtrend within a short period. The price of an oversold asset is usually below its true value which leads to an increase in supply. 

How to read RSI indicator?

Now that you know how it works, you can now learn how to read RSI. RSI uses an oscillator that has an upper boundary of 100 and a lower boundary of 0. The RSI is overbought when its level is above 70. Conversely, it is oversold when its level is below 30. To determine the RSI of an asset, you need to understand the calculations behind it. 

Here is a step-by-step guide on how to calculate RSI:

  • Determine the upward change (U) and downward change (D).
  • Find the average of the Upward change (AVgU) and the average of the downward change (AVgD).
  • Calculate the Relative Strength (RS). 
  • Find the RSI using this formula:
    RSI= 100–100/(1+RS).

On-Balance Volume

What is OBV?

OBV is one of the best indicators for crypto trading that stands for On-Balance Volume. OBV shows the relationship between trading volume and price, and how one affects the other. Joseph Granville brought this indicator into the limelight and used a spring analogy to describe it. He explained that when there is a sudden increase in trading volume without a price change, the price would eventually rise or fall. 

When choosing this indicator, you need to have a proper understanding of how to use and read OBV. Here are the main instances to look out for when reading OBV charts:

  • An uptrend can occur when there is a decrease in price and an increase in OBV. This is known as a bullish divergence.
  • A downtrend can occur when there is an increase in price and a decrease in OBV. This is known as a bearish divergence.

How to calculate OBV?

The calculation for OBV depends on the situation of the trade. Here are the three possible scenarios and their respective calculations. 

  • When the present closing price of an asset is greater than that of the previous day:

             OBV= Previous day OBV+ Present volume

  • When the present closing price of an asset is the same as that of the previous day (no change):

            OBV= Previous day OBV

  • When the present closing price of an asset is less than that of the previous day:

            OBV= Previous day OBV- Present volume

Bollinger Bands

What are Bollinger Bands?

Bollinger bands is a type of crypto chart indicator that assists traders in navigating trading entry and exit points. A major element employed in the use of Bollinger bands is the standard deviation. Standard deviation is simply how far apart the current price of an asset is from its usual price. In trading, prices tend to deviate as a result of volatility. But there is usually an average point at which the price falls. Standard deviation is measured by how much the price moves closer or further from the average price point. Bollinger bands are good examples of a buy-sell indicator.

How to read Bollinger Bands?

When learning how to read Bollinger bands, you need to consider the things that make up the chart. Here are the major things you would find in a Bollinger band:

  • The lower band
  • The upper band 
  • The middle band

The middle band represents the average price of an asset. The lower band represents the lowest point in which the price is expected to move while the upper band represents the highest point in which the price is expected to move. The upper and lower bands of the indicator contract with decrease in price and expands when there is an increase in price. 

Bollinger band is also a means to determine if an asset is overbought or oversold. The price of an asset is overbought when it moves towards the upper band. Meanwhile, the price of an asset is oversold when it moves towards the lower band. 

Although this indicator is widely used, people often wonder how accurate are Bollinger bands? Just like many other indicators, Bollinger bands are not 100% accurate. Not all data produced by Bollinger bands are correct but the indicator has proven true many times. A trader should also use their knowledge and precision when using this indicator. 

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Ichimoku Cloud

What is an Ichimoku Cloud? 

An Ichimoku Cloud is an indicator used to measure support and resistance levels and other relevant data, including trading momentum. The Ichimoku cloud chart contains so much information that with just a glance, you can decipher a lot. But attaining this level of understanding is not easy as the charts may seem complicated. This is why you need to learn how to use and read the Ichimoku cloud. 

How to use Ichimoku Cloud?

Here are some things to note when you want to use Ichimoku Cloud:

  • The Ichimoku cloud has two major lines. The leading span A line, as well as the leading span B, work hand in hand.
  • There is an uptrend when the leading span A rises above the leading span B. This is known to be a bullish indicator. 
  • There is a downtrend when the leading span A dips below the leading span B. This is known to be a bearish indicator.
  • An uptrend is about to occur when the cloud turns green. Conversely, a downtrend is about to occur when the cloud falls downward and turns red.
  • Together with the Leading Spans, Ichimoku Cloud indicator also plots a Conversion Line, a Base Line and a Lagging Span. 

Having seen the features of the Ichimoku cloud, one might ask: does the Ichimoku cloud work? The answer lies in the numerous testimonies of traders that have used this indicator. It has been known to be very effective and reliable. Even greater results are reaped when paired with other indicators like RSI. 

Moving Average 

What is the Moving Average? 

A moving average is an indicator that uses the average price of future trends to determine present ones. It is calculated by adding all the prices of a security over a period, y and dividing it by the number of periods, y. A moving average indicator is continuous because it is frequently calculated.  

The two main types of moving average traders use are Simple Moving Average (SMA) and Exponential Moving Average (EMA). The SMA calculates the average price of a security over a particular time frame.  The EMA performs the same operation but lays more emphasis on recent prices during calculation. 

How to use Moving Average?

A moving average can determine when an asset is experiencing an uptrend, downtrend or when it is ranging. When the price rises above the moving average line, it is a signal to buy. But if it falls below the line, it is a signal to sell. 

Divergences

What are divergence indicators?

A divergence occurs when the price of a security moves in an opposite direction with the indicator. Just from the look of it, divergence sounds like a strange concept. But the truth is, it can either be positive or negative! A divergence is positive when the price of an asset hits a low but the indicator hits a rise in price. This signifies that there is a possible uptrend coming soon. Likewise, a divergence is negative when the price of an asset is high and the indicator signifies a low. 

How to use a divergence indicator?

  • A good indication to take action is when you spot a divergence (either bearish divergence or bullish divergence). If you have the patience and nerves to wait for a triple divergence, or even a quadruple one, then the market will reward you.
  • A stop-loss order can be placed when the price reaches a certain level against you to avoid further losses.
  • Timely price confirmation is important in determining the right entry point. 

Now that you have learned about the best indicators for crypto trading, you can now put them to use. Note that you can use more than one indicator simultaneously. But to do so, a proper understanding of indicators is needed. This article is your ultimate guide in tackling decisions relating to the best indicators for crypto trading, what they are and how to use them. 

 

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How to Automate Crypto Trading Strategies

If you are a crypto trader, you know how demanding crypto assets trading can be. In order to keep up with the highly volatile crypto market you either follow the charts 24/7 or you pay the opportunity cost. Even if you have a high degree of expertise, time is actually the most important asset you have to invest to turn profitable. So you may want to consider to automate your crypto trading strategies.

In order to spot market movements, you scan huge piles of information from various sources, perform different analyses using technical indicators, use on chain market intelligence or watch for signals. It calls for 100% concentration in entering and exiting positions at the right time. And for mastering emotions like a pro.

But why spend all that time when there is a better way to trade crypto? 

You can automate your crypto trading strategy to save yourself most of the hustle and get extra perks: 

  • earn more money than you would earn when trading manually 
  • and get back your time

This article will help you understand what automated crypto trading is, how to choose the best crypto trading platform, and how to automate your crypto strategy. 

So, let’s get started.

What is Automated Crypto Trading?

Automated crypto trading refers to the use of a software, also known as a trading platform, to automate your positions in the crypto assets market with the purpose of making a profit and never miss out on an opportunity. 

What Can Automated Crypto Trading Platforms Offer?

  • Some give you the possibility to build your own conditions and automate those for entering and exiting the market. 
  • Other software also have embedded algorithms that analyze the market to find out if the right conditions for buying or selling crypto assets are met. These then go ahead to either buy or sell the crypto assets autonomously or provide the trader with a signal.

Types of Crypto Trading Automation Platforms

  • Most automated crypto trading platforms act as intermediaries and trade on your behalf on any of the integrated Crypto Exchanges. This is done in a secure way; you connect your credentials from different Exchanges and allow the platform to place orders for you. 
  • Some trading platforms offer both an Exchange and a quant zone where traders can build their own strategies.
  • Other automated crypto trading platforms offer downloadable trading bots that can be managed locally or on a server. These bots are also referred to as crypto trading robots and can be activated or deactivated anytime.

How Does Automated Crypto Trading Work?

We’ll focus on how to automate using a platform that works on your behalf in your Exchange account.

Step 1

You start by finding your preferred automated crypto trading platform and creating an account.

Step 2

In order to automate your crypto trading, you first have to build a trading strategy.

Step 3

Once you create your strategy, you validate it through heavy backtesting.

Step 4

As an optional step, you can run your strategy in Demo Trading until you are confident enough to commit real money.

Step 5

Connect your preferred Crypto Exchange and start automating. The platform will take it from there and run your strategy day and night, without you having to watch the market continuously.

There is a last step: You take your time back and enjoy life. :)

Advantages of Using a Platform to Automate Crypto Trading Strategies

Using an automated crypto trading platform offers the following advantages:

  • Saves time – You can free up the countless hours you would otherwise spend analyzing the market to find optimal opportunities for opening and closing positions in the market.
  • No emotional trading – Robots do not have emotions (yet) and will therefore not place revenge trades or let emotions mess up the plans of winning in the market. 
  • Sticks to the plan – Since the automated trading platforms use software, they are able to stick to the set trading parameters no matter the conditions or outcomes unless the parameters are changed to new ones. This allows you to stick to your trading strategy, while you enjoy your life.
  • Helps boost trading skills – You can use automated trading platforms to quickly test and validate or invalidate your trading strategies and find out what works and what doesn’t more quickly than if you were to do that manually. This also allows for an iterative process that enables you to fine-tune your trading strategies.
  • Faster response to market conditions – Automated crypto trading uses a software to analyze the market and place trades. Therefore, the trades are opened and closed faster than if they were being opened or closed manually. This is a huge advantage since crypto assets prices are very volatile and delays in opening or closing trades, after conditions in your trading strategy are met, could lead to lower profits or in a worst-case scenario, losses.

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Things to Consider Before Using an Automated Crypto Trading Platform

Before settling to use a specific automated crypto trading platform, you should consider the following things:

  • Technical issues may occur with the Exchanges you’re trading on or within the automation platform. Choose a platform with focus on building the best product. Make sure there is a good team behind and technology is always up to date.
  • You need experience in order to build good strategies that give you a positive alpha. But this goes for manual trading also :) On some platforms you can choose ready-made strategies or you can copy trade other traders out there.
  • Make sure you don’t get caught in the dreams of getting rich fast. An automation platform is about … well, automating your current trading strategies. And we all know there is no getting-rich-fast strategy. Or maybe it is? 

How to Choose the Best Platform to Automate Your Crypto Trading Strategies

When choosing an automated crypto trading platform, you should consider the following:

  • Flexibility – Can you control the entire life cycle of your trading plan? Can you build strategies that cover most of your ideas? Can you combine different data points and use different tick intervals for your indicators?
  • Backtesting – Can you test your assumptions on historical data? 
  • Demo trading – Can you simulate your strategy before using it?
  • User fees – Some automated crypto trading platforms require you to pay a certain amount of fees to access the platform’s services. Make sure you pay for the right amount of features.
  • Compatible Crypto Exchanges – Some crypto trading automation platforms are integrated with a specific list of Crypto Exchanges. Look up and see if your preferred Exchanges are on the list. Does it also offer crypto portfolio tracking?
  • Nature of the automated crypto trading platform – Some provide external trading signals for you to use in placing and closing orders while others go ahead and autonomously place and close the trades without any intervention. If you want full control over creating your own trading strategy and rules, there are also options for you. Just make your choice.
  • The assets that you intend to trade – Some automated crypto trading platforms only support a bunch of the assets out there. 
  • Security – check if the platform follows security standards and how good the technical team is. 
  • Customer support – How easy is it for you to get your questions answered? Choose a platform that offers fast support and the team is always trying to improve their product.

Why Choose Vestinda to Automate Your Crypto Trading Strategies?

Vestinda allows both beginners and experienced traders to automate trading strategies. Our promise is to help you take back your time and experience life while we take care of delivering high quality automation execution on your strategies. 

Below are some of the reasons that makes Vestinda one of the must-try automated crypto trading platforms out there:

  • Easy to use – You simply drag and drop various tools like technical indicators to build trading strategies. Implementing your trading ideas will become a breeze. In time, you will feel like you’re doing it with your eyes shut.
  • Backtesting – It allows you to validate your ideas using past market prices. You can go as far back as the asset was listed on the Exchange and you get advanced statistics on how your strategy would have performed.
  • Demo trading – Still not confident after Backtesting? You can try paper trading your strategy on the current market conditions for a while before staking real money.
  • Very flexible – You can build any trading strategy by combining different custom indicators, each with different tick intervals. Logical conditions, math equations or indicator compounding, you name it. All inside our Strategy Builder.
  • Accurate automation and execution – Any condition in your trading rules is evaluated in a snap. Then the order reaches the Exchange in a few milliseconds to make sure you get the best possible execution.
  • Most popular Crypto Exchanges are integrated within the platform. Choose your preferred one and start automating.
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How to Create the Best Crypto Trading Strategy

Traders who stick to a well-thought-out investment strategy have an edge over the ones that do not. So let’s see how to create the best crypto trading strategy for you.

Strategies allow you to make more educated decisions by analyzing a lot of data. Hence, gaining maximum out of your investments. Strategies will vary from trader to trader, depending on personal risk tolerance as well as financial goals, however, it is an essential part of navigating the market.

Investing in crypto assets without a trading strategy is like jumping in the ocean without learning how to swim first. 

What Are Crypto Trading Strategies?

Crypto assets are by far one of those investments that have the highest risk associated with them. Trading them without a plan is risky and has the potential of leading to a loss of invested capital. 

A crypto trading strategy means following a plan when you engage in the process of buying or selling different crypto tokens. It is a system based on predefined rules and criteria which are used when making trading decisions.

Factors to Take into Consideration When Creating Your Crypto Trading Strategy

In order to turn your strategy into a profitable one, you need to mind the following:

  • liquidity – On a market with good trading volumes, the spread between BID and ASK will always be lower. You need to account for large spreads when building your entry and exit rules. Take profit and stop loss should also be set accordingly. 
  • trading pairs – A strategy that works on Gold may not work on Bitcoin. Make sure you backtest on the asset that you want to trade.
  • market volatility – There are different types of trading strategies. Some work great following the trend, others are more suitable for sideways movement of the market, while others can capture the most value from big price changes. Use the right tools to identify the market you’re trading in.

Steps to Create the Best Crypto Trading Strategy

Step 1: Research

Before even investing a dime within a crypto asset, the first thing you will need to do is due diligence and research on the projects you are interested in. While Bitcoin and Ethereum are largely dominant on the market, make sure you do research on as many alternative crypto assets, known as altcoins out there.

Investing in a crypto project without learning what it is about is like traveling to a foreign country without learning its navigational layout or bringing a GPS – you can get lost easily.

For example, there are alts out there that contribute to the changes in the real world, while others contribute to on-chain performance, or serve as a governance token for the future of specific projects where the more tokens users hold, the more power they have. 

Step 2: Set Risk Levels & Goals

Make sure that you develop a common understanding of risk across multiple crypto assets so you can manage a strategy that is cost-effective when it comes to the risk involved in it. You also need to achieve a better understanding of the risk in order to get a competitive advantage. Here you will also need to build safeguards and learn how to respond effectively to crucial risks.  

Step 3: Choose Your Asset

After you have done your due diligence, and have set your specific risk levels and goals, it is now time to pick the crypto asset that you will be investing in. 

The interesting thing to note here is the fact that you do not have to limit yourself to a single crypto asset. It is recommended that you branch out into multiple crypto assets to diversify. Also, you never quite know when one can spike up in value tremendously. 

Step 4: Choose a tick interval for your strategy

You have to read the charts using different tick intervals to follow price actions and identify patterns. Use technical analysis to your advantage and adjust strategy when the market conditions change. Use time frames such as 3 minutes, 5 minutes, 15 minutes, 1 hour, 4 hours, or 1 day to better choose your entry and exit moments.

Step 5: Choose entry & exit rules

The entry point is the price at which you will decide to buy a crypto asset, while an exit point is a level at which you will sell. You can choose to build your entry and exit conditions by using technical analysis patterns, on-chain data intelligence. The sentiment of the market can also play a major role in the decision-making process.

Step 6: Backtest your assumptions

Backtesting is this general method through which you can see how well a strategy or a model has done; ex-post. This will help you assess the viability of a trading strategy and see how it would have played out on historical data of the crypto token in question. If this works, you will have the added confidence of using it going forward.

Step 7: Analyze results

Another key aspect of forming a good investment strategy is to evaluate it in order to predict its future performance and determine its sustainability. When you analyze the results efficiently, you can assess the financial strategy or create a new one based on the performance of the previous investment. Look at specific statistics that can help you understand how well the strategy performed (sharpe ratio, alpha, holding time, maximum drawdown etc.)

Step 8: Revise strategy

You have to adjust the conditions, as well as the risk levels, safeties, and other inputs based on how the market evolves throughout time. Keep updating your strategy to get the best possible outcome.

Tips to Improve Your Crypto Trading Strategy

Safeties

  • Stop-loss: A stop-loss is a type of protection that helps you manage risk, so you do not end up losing more than you wanted to. If the price of the asset moves against you with the percentage set, the Strategy will EXIT.
  • Take-profit: Obviously, it is a way to close a position at a profit. If the price of the asset moves into your favor with the percentage set, the Strategy will EXIT.
  • Trailing stop loss: The Trailing Stop Loss functionality works similar to the Stop Loss, only that it trails the price change if the price moves in your favor. Then, if the price changes direction against you with the percentage set, the Strategy will EXIT.

By taking advantage of all of these safeties you can improve efficiency. Plus it gives more peace of mind and helps you create the best crypto trading strategy for you.

Try Not to Risk More Than X% Out of Your Portfolio

Each position and investment that you make should not risk more than X% of your entire portfolio. This will typically be in the 2% range, but it can vary based on asset fundamentals and the entry signal’s strength. The position size refers to how much you can put into a specific crypto asset. For finding the appropriate sizing, you should consider your risk tolerance level, as well as the size of your account. 

Keep an eye on your entire portfolio

Track your crypto portfolio and make sure you have an overview of your net worth. It can give you a hint on how to size your positions, whether you are exposed to much or staying in cash, or how much of your portfolio is in different assets.

What Tools You Need to Create the Best Crypto Trading Strategy?

There are many tools out there available to help you in the creation of your crypto trading strategies. However, there are a few things you need to keep in mind before picking the right one: 

  • It needs to be flexible and easy to understand as well as use. 
  • You need to analyze how much data is available inside the platform and what kind of options you have when it comes to using them together. 
  • Check if you require any programming skills or not in order to use it.
  • The tool needs to give you various functionalities, such as backtesting on historical data, paper trading or live trading.
  • You should receive advanced analytics on the strategy results, that will help you make an educated decision going forward.
  • You should be able to see your investments easily after you start a strategy and see the results in a simple way.

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Why Choose Vestinda to Create Your Crypto Trading Strategies?

Vestinda empowers your investments in digital assets. You can build trading strategies that you can use to automate the entire investment process.

It offers you all of the aforementioned features, and you can even invent unique algorithms with the easy-to-use, rich and flexible drag and drop strategy builder.

 

See the main reasons you should try our strategy builder:

  • You can use close to 100 technical indicators
  • Different tick intervals can be used in the same strategy for each indicator. Combine them to come up with new trading ideas and boost your profit.
  • Conditions for entry and exit can be defined as simple as A+B; build expressions using logical, arithmetic and relational operators – nothing that a primary school child doesn’t know :)
  • Create strategies with no programming skills, in a savvy interface that makes it all a breeze.
  • Build new indicators by combining different ones together in mathematical formulas; You can even use indicators compounding on multiple levels.
  • This is all powered by a powerful backtesting engine that offers full historical data for all of the assets on the integrated exchanges.
  • You also get access to our advanced analytics module that will help you make informed decisions on how to improve the strategy.

On top of that, you can start with a free trial. Secure your spot! 🚀🚀🚀

 

Vestinda Trading Strategy Builder

Vestinda Trading Strategy Builder

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