How to use Safeties: Take Profit, Stop Loss, Trailing Stop, Trailing Stop Multiple Levels, Stop Loss Multiple Levels
Safeties are essential risk management solutions in Vestinda that help you build profitable trading strategies. They include Take Profit, Stop Loss, Trailing Stop, Trailing Stop Multiple Levels, Stop Loss Multiple Levels, each serving a unique purpose in ensuring your investments are secure and profitable.
In this guide, we'll walk you through how to use these features to safeguard your assets.
👀 Please be aware that each Safety relies on price fluctuation and not on the full account balance.
E.g.: If you allocate $1000 to a strategy, a stop loss of 10% will get you out of the position when the balance of the strategy is $900.
WHY? Account balance in a currency can fluctuate for different reasons in the new world of trading and investing. Like for eg. you may have a staking scheduled or a recurring buy scheduled - so your main account balance changes without an impact from the strategy. Also, you may run multiple strategies in parallel that can affect your overall account balance.
Take Profit is a strategy that allows you to set a specific price increase at which you want to sell an asset to secure your profits. It is designed to lock in gains and prevent potential losses in case the market reverses. If the price of the asset moves into your favor with the percentage set when compared to the price from the entry point, the trade will be closed.
E.g: You set TP at 10%
If you buy in at $1000, and price goes to $1100, your strategy will exit the position.
Stop Loss is a crucial safety net that helps you limit potential losses by specifying a maximum percentage you are willing to lose per with each position. If the value of the asset you trade falls below a certain set threshold, the Position will be closed by the strategy. If the price of the asset moves against you with the percentage set when compared to the price from the entry point, the trade will be closed. It's an essential risk management tool.
E.g: You set SL at 10%
If you buy in at $1000, and price goes to $900, your strategy will exit the position.
Trailing Stop Loss
Trailing Stop Loss is an advanced strategy that enables you to secure profits while allowing your investments to continue growing. It automatically adjusts the Stop Loss level as the market price moves in your favor, locking in profits while giving your assets room to grow.
Trailing Stop Multiple Levels
You can set multiple levels of stop based on how much the trade has gained so far. Format is 5/3, 10/4. First number is the profit activation level and 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, the stop is changed to 4%.
The trade will be closed if the price moves against you with the current stop from the maximum reached.
E.g: You set Trailing Stop Multiple Levels to be 5/3, 10/4
You enter a position at 100.
If the price goes to 105, now the Trailing Stop activates and is is 3%. That means that if the price goes back to 101.85 (which is a 3% drop from 105), the Position will be closed.
If the price instead continues to grow, and it goes to 110, now the Trailing stop is moved to 4%. In this case, if the price drops 4% from 110 and it goes to 105.6, the Position will be closed.
Stop Loss Multiple Levels (Stop Loss Recovery)
Think of this Safety as a way to close the Position if the Market is making lower lows and lower highs after you enter a Long Position (or Higher Highs and Higher Lows for a Short Position)
You can set multiple levels of stop loss with trailing based on how much the trade has lost. Format is -5/-2, -10/0, -15/-4.
First number is an activation level and is the decrease percentage from entry price. Second number can be negative and is the decrease percentage from entry price where the position will close if activation got triggered. With this example, if the price depreciated with 5% since the entry point, then the position will close if the position is on 2% loss compared to the entry point. If the price has a 10% loss from entry point, the position will close if the price goes back to the entry point. If the position reaches a 15% loss, the position will close if the price recovers to only a 4% loss.
E.g: You set Trailing Stop Multiple Levels to be -5/0, -10/-4
You enter a position at 100. If the price goes to 95, the Stop Loss Recovery is activated and set at 0%. That means that if the price goes back to the entry price (100), the Position will be closed on break even (without considering fees ofcourse).
If the price instead continues to decline, and it goes to 90, now the Stop Loss Recovery is moved to 4%. In this case, if the price recovers and goes to 96 (4% decline from the Entry price of 100) the Position will be closed with only 4% loss.
How to Set Safeties in Vestinda:
- Select The Strategy: Begin by selecting the trading strategy you want to edit and add Safeties to. Get one from you strategies here: https://app.vestinda.com/my-strategies
- Click on Edit button
- Scroll to the Safeties area in the Builder
- Enable the Safeties you want to use
- Set the values for your Safeties: Specify the values according to each safety.
- Save the Strategy: Save your strategy settings by clicking on Save.
- Consider your risk tolerance and investment goals when setting any of the Safeties.
- Regularly monitor your strategies and adjust your safety settings as market conditions change.
- Make sure you Backtest each strategy and each change you make before saving the strategy.
- Diversify your investment portfolio to spread risk effectively.
By utilizing Take Profit, Stop Loss, Trailing Stop, Trailing Stop Multiple Levels, Stop Loss Multiple Levels in Vestinda, you can enhance your trading strategies, minimize potential losses, and secure your profits as you navigate the dynamic world of trading and investments.