Planning daily/weekly trades at certain price levels

Ekliptor

Administrator
Staff member
Requirements:

Getting started:

Go to the "Configuration" page of your WolfBot instance and select the configuration named "PlanRunnerSimple".
This is an example configuration watching many coins on Bitfinex and using margin trading to buy/sell at support/resistance lines.

Switch to the "Trading" tab of the "Configuration" page and adjust (remember to read all parameter explanations on this page carefully):
  • your exchange(s) (used for Backtesting as well as live trading)
  • the coin pairs you want to trade on
  • Enter your orders into the PlanRunner strategy. You can enter as many orders per strategy as you wish. For example:
    Assume Bitcoin is at 7300$ currently. You can enter a buy order at 7000$ and a (short) sell order at 7500$
  • adjust the low and high values and candleSize of the RSI strategy. Your orders will only get executed if the RSI confirms your buy/sell intention. See this guide for details. This has 2 advantages:
    - You will never catch a falling knife. If the support/resistance gets broken, WolfBot will not execute your planned trade
    - Your don't place the orders on the exchange just yet, so your trading capital is still available to trade using other strategies in the meantime.
  • adjust StopLossTurn, especially setback and setbackLong - the trailing stops for your positions
  • add/adjust or remove TakeProfit and TakeProfitStochRSI. The latter will close a profitable position (partially) once StochRSI is at its high/low.
  • configure or remove RSIScalper if you want to scalp buy/sell to increase your existing position size after the market turned against you


Tips:

  • Know not only your (trailing) stop-loss, but also your profit targets when looking at support and resistance lines and setup your take-profit strategy accordingly.
  • Spread your capital equally across different coins (beginners 3-6 coins, experienced traders 7-20 coins). This way you spread your risk in case the market doesn't behave as expected on the support/resistance lines you identified. Additionally it increases the number your trading opportunities since not every support/resistance will get hit on your trading position timeframe (daily/weekly).
  • Use both USD and BTC trading pair markets for your coins. This again spreads risks and increases opportunities.
  • Using Technical Analysis, including support & resistance lines, on smaller market cap coins is more risky since they more often have sudden unexpected spikes/drops due to their lower trading volume. Using this strategy on the top 20 market cap coins is therefore less risky. However, the potential gains are higher if you also enter some support/resistance lines of lower market cap coins correctly.


The trading idea behind it:

You want to be ready 24/7 to automatically enter the market once there is the movement you have been waiting for. At the same time you want to be protected from catching a falling knife (meaning your support/resistance line get broken) and not enter a trade just because the market is at an interesting (high volume) price level. This is where the challenge where the PlanRunner strategy with an RSI strategy on a small candle size (5-15min) provides a solution to.


RSIScalper:
Increasing your position size after the market turned against you. Why?
Suppose you buy 0.1 BTC at 7000$. Now the prices drops to 6500. This means your position now is at a 7.14% loss (assuming your stop-loss is higher than this so it didn't get closed).
Now you have 3 options:
  1. take that loss of 7.14% and sell your 0.1 BTC (close your position)
  2. do nothing and hope the market will go up so your loss gets smaller (or you even get a profitable position long-term)
  3. double (or increase) your existing position size and buy another 0.1 BTC at 6500$
What's the reasoning behind option number 3?
When going with option number 3, your break-even price (the price where your position is at 0 profit or loss) comes down from 7000$ to 6750$ - calculated by (7000$ + 6500$) / 2
This means from the current price of 6500$ the market only needs to go up 3.85% which is easier and you can close your position without any profit or loss and get your full trading capital back for your next trade.

Remember to set a tight stop-loss when doing this because you don't have any guarantee that the price doesn't go down further and you certainly don't want to increase your losses.

This is another reason why experienced traders only use a small percentage of their capital deposited on an exchange for a position (5-20%). Then they always have the option to try to recover a position that's underwater by increasing its size.
 
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