Gunbot Money Management Ultimate Guide
Discover the Secrets to Crypto Trading Profits and Learn How to Manage Your Money
The reality is that if you’re a new crypto trader, you probably are breaking your brain trying to learn every trading indicator available, and even if you’re advanced already, you may be proud to understand Fibonacci retracements and Elliot waves…
Still, I’m here to tell you that none of that matters.
Yeah, you read that right; if you do not enter the market with a proper money management strategy, you may as well be dead in the water very soon, regardless of how good you are reading charts… And that’s a fact!
To begin to understand trading, you have to digest the concept that trading is a probability game.
You really don’t need to know how to trade to Make Money. The odds can favor you and give you a stroke of winnings, but not for long, so the question is.
What would you do when the market goes in the opposite direction of your trade decision?
Well, luckily, you have “Gunbot Money Management Techniques” built in your bot to help you with that, but stick around cause even if You don’t own Gunbot yet, you can learn a few ways to help you cope with the volatile cryptocurrency market.
Gunbot Money Management How to Handle Crypto Bags
A bag of coins means we placed a buy order, and the market decided to keep dumping instead of going up as per our prediction; does that ever happened to you?
And it is wonderful, nobody is always right, and indicators are just that; it can only give us an indication of where the market may go as it did before.
Still, as you should know by now, the past does not equal the future, and if something happened before, it doesn’t mean that it has to happen again, especially on crypto.
So now you are left with a bag, what can you do about it?
How to get rid of a bag applying Gunbot Money Management Strategies?
Gunbot comes equipped with the necessary money management tools needed for those less favorable trading situations, and they are:
- Stop Loss
- Dollar-Cost Average (DCA)
- Reversal Trading (RT)
Those are the 3 key components of a successful Gunbot Money Management Strategy.
You don’t need to use the 3 simultaneously, but you could mix DCA with RT and achieve even better results, as I will explain later.
Gunbot Money Management “Stop Loss”
Where to find the Stop Limit Option on GUI and Parameters Setup?
This is the simplest of the 3 but the most feared by novice crypto traders. Some even made an argument that crypto is different than Forex or Stock Trading, and that’s arguable cause a trade is a trade no matter what niche, but anyway…
Stop Loss is just plain and simple “Cut Your Losses” and move on to the next trade. See why it is feared? Nobody wants to lose what they got, right? It is ok but, keep in mind that this decision can cost you even more as the coin you’re holding keeps dropping in value.
Remember Late 2017?
If you were holding on to BTC when it was at 15-20K, the are 2 possible outcomes for you, you either cut your losses fast and moved on, or you probably are still holding today because BTC ain’t back there yet, so you’re still at a loss and holding a bag of BTC for 3 years with the hopes that one day, its value goes back to 20K again…
The same did happen to many other coins. Wasn’t XRP at like $3? I hope you get the idea.
The main thing is that you can not trade, you’re stuck with a bag of the coin you can not sell anytime soon, and your portfolio value keeps going down.
Hodling is for Investors Not for Traders.
We all have times when we hear something over and over again, but it doesn’t seem to stick with us, but one day we read from another source or watch a video, and boom, we got it!
That was my case when I saw this video b Adam Khoo titled Trade Like a Casino. That video really made me understand Stop Loss’s real value and enter a trade with a plan. If you got the time, check it out, I hope it can help you too.
Basically, what you can take from it is always “Risk 1 to Make 2“, with that formula, when you lose, you lose 1, and when you win, you make 2, helping you win even if your strategy has only a 50% success ratio.
To apply the stop loss Gunbot money management strategy, you will have to set a STOP_LIMIT value in your config.js file, or the Gunbot GUI expressed in the percentage of loss you will sell after a coin value dropped.
For example, “STOP_LIMIT”: 2 tells Gunbot to sell when the price dropped 2% lower than your bought price.
Gunbot Stop Limit Parameters to set on config.js
“STOP_LIMIT“: Set a percentage you want Gunbot to activate your Stop Loss.
“SL_DISABLE_BUY“: True or False, set to true if you want to disable buy orders after the Stop Limit has been reached.
“COUNT_SELL“: Set a number after which you want to disable sell orders for that pair.
“PANIC_SELL“: True or False, set to true to sell the quote coin at market price ASAP.
Can you lose money this way? Absolutely, trading is always a risk, but this is only one way and a choice you have to cope with a price drop, so let’s check DCA and see what is different about it.
Gunbot Money Management “Dollar-Cost Average” (DCA)
Where to Set DCA on Gunbot GUI?
The Dollar-Cost Average is, in fact, an Investor long-term strategy and no doubt have a great success ratio but bear in mind when you use it as a trader, it can eat your Base coin capital really fast if you don’t control it by tuning the different parameters in the bot.
In Gunbot, the parameter is called DOUBLE_UP, and here is how to set it up.
“DOUBLE_UP“: true or false, will enable or disable this feature.
“DOUBLE_UP_CAP“: 1, set to 1, means the bot will Buy 1:1 the number of quote coins you have every time.
So keep in mind this will grow fast depending on how many rounds you choose, and it will always be the amount you have at the moment of double up, so, for example, you got 100 coins, and it will buy 100 coins, but next round you will have 200 coins.
So it will buy 200 this time and so on; if you set it to 0.5, then the ratio will be 0.5:1 (a higher Value is Better if you got the capital)
“DU_BUYDOWN“: 2, this is the minimum price difference between the last buy, is expressed in percentage and it will have to occur, before and regardless of the DU Method you choose, so for example.
“DU_CAP_COUNT“: 1, this is how many rounds of double up you want to go for. I think this is self-explanatory.
“DU_METHOD“: “HIGHBB,” this can also be RSI or number value to express a percentage below the last price.
My personal recommendation for this value is to set a number equal to the DU Buy Down. In this example, I would set it to 2; my average down strategy will kick once the price drops 2%.
Notice you need to set a High BB and RSI Buy Level in your config if you use those methods.
You can download plenty of good Autoconfig Strategies for Free from the Gunthy Marketplace that takes advantage of DCA.
Obviously, the idea behind the average down strategy is that price will recover soon, and we can get out faster because our average price per coin is lower now.
As I said, this method could cost you a Base coin, but what if you could buy Quote with the same Quote you already have and keep your base coin?
To Learn More about DCA, read this Gunbot Dollar-Cost Average Overview article.
Gunbot Money Management “Reversal Trading” (RT)
Where to Find and Set the RT Parameters on Gunbot
This was the Gunbot strategy developed to help you survive the bear market, like the one we had in 2018, which basically was a Huge dump, leaving most of us asking ourselves. Now What?
Well, now we can accumulate coins while prices drop without spending more than we already invested with our base coin before the dump.
Reversal Trading is Like a Stop Loss that sell the quote we got and uses those earnings to buy more quote coins for a lower price, so basically sell low to buy lower.
Ok, here is what happens, you buy a coin, and the price drops instead of going up, RT will sell at a loss at your set percentage.
Then if the market drops, even more, RT will buy the same coin with what you already have of it for a lower price, thus accumulating more quote coins and making it easier to exit once a reversal occurs.
RT is a Gunbot Money Management Unique Method.
Let me explain a bit more in four simple steps. Just keep in mind that this is a basic example, and RT will do much more than that.
Step 1 you just bought 100 Xcoins with $100 USDT, but the price went down, and you have a bag of 100 Xcoins
Step 2 RT kicks in and sells the 100 Xcoins for $80 USDT; you’re cutting your losses but have no bag.
Step 3 price went down further, and you buy 140 Xcoins with your $80 USDT.
Step 4 price recuperates sell the 140Xcoins for $120 USDT, making 20% profit.
Remember, this is a straightforward example to illustrate the complex operations Gunbot RT executes. Remember that the idea behind Reversal trading is to accumulate quote coins without touching any more base coins than the ones you already invested before the RT process started.
How to activate and utilize Reversal trading in Gunbot
“RT_ENABLED“: True or False, set one to enable or disable the RT function on your strategy.
“RT_BUY_LEVEL“: 2, The bot will buy at the set level expressed in percentage lower than last RT Sell and triggers an RT BUY
“RT_GAIN“: 1, This is the percentage after the initial RT BUY that will fire an RT Sell after the RT BUY LEVEL is met.
“RT_BUY_UP_LEVEL“: 0, This value sets a percentage above the last RT SELL order and sets an RT BUY higher than RT SELL
“RT_ONCE“: True or False, if set to true, will execute the RT process and disable the pair after a successful round. If you set it to false, you will continue the RT process as often as the chosen pair meets your settings criteria.
“RT_ONCE_AND_CONTINUE“: True or False, if you set it to true, will continue using the pair, but without RT, set to false will follow RT rules and execute.
“RT_MAXBAG_PROTECTION“: 10, This is a percentage of the maximum allowed drop between the break-even price and current price to start the RT operation.
“RT_TREND_ENABLED“: True or False, If you set to true, it enables the RT feature to gather information to trail the RT BUY or RT SELL if you use it with Trail Me RT either Buy or SELL or both.
Tips for applying to your RT setup
It is highly recommended that you analyze the pair you want to enable RT and set the RT Gain higher than the spread.
You must set up RT BUY LEVEL higher than RT GAIN to help accumulate quote coins.
Depending on your chosen pair’s volatility, you should find a sweet spot to hit RT Buy.
It is a good idea to add Dollar-Cost Average to the mix and allow one round of DCA before entering RT. This will help you with your first RT Sell order and a possible Buyback order at break-even.
Gunbot Money Management Recap and Conclusion
- No matter how good you are reading charts, never forget that Anything can happen once you enter a trade, so be prepared for any outcome beforehand.
- Accepting a Loss is OK as long as you are set with a good risk/reward ratio to overcome a bad stroke of luck; remember always risk 1 to make 2
- Is ok to Average down as long as the main trend is bullish and you have the capital to buy more quote with your base coin, is also good to add that you should do it with a coin you don’t mind to hold, and it has a good track record like BTC, ETH and so on.
- Get comfortable with the different RT settings, read about it as much as you like, or ask me any questions, but get ready if the bear market hits us again.
If you want to learn something from all this, please understand this:
Realize that there is a potential loss is in every trade. Accepting the risk is a trading skill. Your trades’ flawless and consistent execution is one of the most crucial elements of becoming a profitable trader.
Believing that you know “what happens next” after you place an order will only make you vulnerable.
Gunbot is your best ally to help you create trading rules. You have to develop the discipline to abide by them.
If you truly understand what the bot does and already predefined your trading strategy, let the Emotionless Crypto Trading Bot take care of your chosen Gunbot Money Management method.