The bot uses the funds that are in your account on the exchange to sell. For its work, the bot uses the API interface of exchanges to display orders according to the chosen algorithm and to track their execution.
There are currently two types of algorithms for RevenueBot bots:
“LONG” Algorithm
The bot operates in cycles and is based on the principle of buying when the price falls (initial part of the cycle) and selling everything that was bought when the price rises (final part of the cycle). The idea is that while having a certain deposit, the bot buys not for the whole amount at once, but in part when the price falls, using a predetermined set of safe orders.
The first purchase order in the grid is the closest to the current price and the smallest in volume. Each subsequent purchase order is volumetric (Martingale strategy) and cheaper. Thus, when the price falls, the bot buys more and more, but at a lower price. This allows it to make a final profitable transaction, selling everything that was purchased at a price much lower than the bot started buying at.
Once the orders have been placed on the stock exchange, the bot monitors their implementation. If the price falls, the first purchase order in the grid that was closest to the current price will be executed. Taking note of this, the bot will put a profit-fixing order for sale on the exchange (the volume of the order will be the same as that of the first order that was just executed in the grid for the purchase, and in the price will be laid a profit).
The bot will continue to monitor the implementation of the orders on the exchange. If the price falls further, a second grid order will be executed. Taking this into account, the bot will cancel the current profit-fixing order for sale and will issue a new one, which will carry the volume of two completed purchase orders; its price will be lower than the price of the sale order that was just cancelled, but it will also make a profit. The algorithm will continue operating in this manner until the price rises and the profit-fixing order is executed.
It should be noted that as the price falls and the primary purchase orders are executed, the price of the profit-fixing sale order will also fall, which will make it possible in the end to sell everything that was purchased at a price lower than the bot started buying at. You should also note that the profit-fixing order is always the same, it carries in itself the volume of all executed primary orders, and its price is the price of the purchases made plus the profit.
When a profit-fixing order is executed, the cycle is ended, the bot calculates everything and starts a new cycle of work. The profit is received in the second coin selected for the trading pair.
Important: We do not recommend interfering with the bot’s work algorithm and performing any manual actions with the exchange orders that the bot created. Such interference will result in a bot error.
Carefully consider what the grid of orders for the LONG algorithm is and how it is calculated.
A grid of orders is a table in which rows are the number of orders, and columns are the volume of these orders and their prices. The number of rows in a table is determined by the number of orders in the grid.
How to calculate the prices of the orders in the grid?
Orders in the grid are distributed over the entire overlap of the price change.
The price distribution of orders in a grid can be linear (default) or logarithmic.
For example, the current price of an asset 100 is set at a 50% overlap rate with a price change of 50%, the first order is indented 5%, the number of orders is 10.
The linear distribution will give prices as follows: 95 90 85 80 75 70 65 60 55 50.
The logarithmic distribution will give the following prices: 95 93 90 86 81 76 71 64 59 50.
As you can see from the logarithmic distribution, we get more orders near the current price.
Important: The use of logarithmic pricing increases the risks of trading.
Read in detail what the risks are when trading with a bot.
How do you calculate the amount of orders in a grid?
The Martingale System is used to calculate the volume of orders. The Martingale System sets the percentage by which each subsequent order in the grid is larger than the previous one. The first order in the grid is the smallest in volume and the closest to the current price, each subsequent order is larger than the previous one by a specified percentage and further from the current price.This makes it possible to obtain a profit with a lower rebound price. The higher the percentage of Martingale, the lower the rebound price needed to make a profit.
A simple example of how a bot works in a LONG algorithm with high volatility.
For example, the bot trades with the pair Y/X, the percentage of overlap of the price change is 50%, the indentation of the first order is 5%, the number of orders is 10, martingale is 5%, the deposit allocated to the bot is 1000 coins "X", and the desired profit is of 1%. The bot will buy parts "Y" for "X" when the price of "Y" falls, after which it will sell all purchased "Y" with the price of "Y" rising.
At the time of calculation of the order grid, the current price on the exchange of the purchased asset (coin "Y") is conditionally 100. Based on this price, the bot will calculate and submit to the exchange the following grid of purchase orders:
1 order: volume 0.83, price 95
2 order: volume 0.92, price 90
3 order: volume 1.02, price 85
4 order: volume 1.15, price 80
5 order: volume 1.28, price 75
6 order: volume 1.44, price 70
7 order: volume 1.63, price 65
8 order: volume 1.85, price 60
9 order: volume 2.12, price 55
10 order: volume 2.46, price 50
As you can see, the first order is the closest to the current price on the exchange and the smallest in volume, every subsequent volume is cheaper.
If the price falls to 50, all 10 purchase orders will be executed successively. In order to get a profit, it will be necessary to raise the price of "Y" to about 70 in order to get the desired profit of 1%. It’s much lower than when we started buying "Y" at 95. Note that the higher the percentage of Martingale, the lower of a price increase is needed after the fall to fix the profit, as most purchases will be at low prices. Profit will be made in coin "X".
“SHORT” Algorithm
The operating principle is mirrored by the LONG algorithm and is based on the principle of selling when the price increases (initial part of the cycle) and buying cheaper everything that was sold when the price drops (final part of the cycle).
You can read all the features of the bot algorithm in the description of the LONG algorithm. Only the differences between the SHORT algorithm and the LONG algorithm are described below.
The first order to sell in the grid is the one closest to the current price and the smallest in volume. Each subsequent order is longer (the Martingale system is used) and more expensive. Thus, as the price increases, the bot sells more and more, but at a higher price. This makes it possible to make a final profitable transaction, having bought everything that was sold at a price much higher than when the bot began to sell.
After putting in place the grid, the bot tracks the orders issued and, if executed, issues a purchase order at a price lower than the ones sold.
With this kind of algorithm, a profit bot can be obtained both in the second coin of the traded pair and in the first coin.
The profit in the first coin is suitable, for example, for those who have been holding promising altcoins for a long time and want to trade them to btc, or want to increase the original deposit exactly in altcoin, rather than earn in btc.
A simple example of how a bot works in a SHORT algorithm with high volatility.
For example, the bot trades a pair Y/X, sets a 50% overlap rate, 5% forfeit of the first order, 10% orders, 5% Martingale, a deposit allocated to the bot of 100 coins "Y", and a desired profit of 1%. The bot will sell parts "Y" for "X" when the price of "Y" rises, after which it will buy all sold "Y" when the price of "Y" falls.
At the time of calculation of the grid of orders, the current price on the exchange of the asset being sold (coin "Y") is conditionally 100. Based on this price, the bot will calculate and submit to the exchange such a grid of purchase orders as follows:
1 order: volume 7.9, price 105
2 order: volume 8.3, price 110
3 order: volume 8.7, price 115
4 order: volume 9.2, price 120
5 order: volume 9.6, price 125
6 order: volume 10.1, price 130
7 order: volume 10.6, price 135
8 order: volume 11.1, price 140
9 order: volume 11.7, price 145
10 order: volume 12.3, price 150
As you can see, the first order is the closest to the current price on the exchange and the smallest in volume, with each subsequent volume being more expensive.
If the price rises to 150, all 10 sales orders will be executed successively. In order to get a profit, it will be necessary to wait for the subsequent fall of the price of "Y" to about 130 in order to get the desired profit of 1%. That’s a lot more than when we started selling "Y" at 105. Note that the higher the percentage of Martingale, the lower of a price drop is needed after the increase to fix the profit, since the bulk of sales will be at high prices. Profit can be obtained in both "X" and "Y" coins.
As a result, the success of a trade is determined by indicators such as the number of orders in the grid, the difference in their volume, the distance between them, the placing of the first order, and how far from the current price the last order in the grid will stand.
All of these indicators are available in the bot settings. Details on each of the configurations are provided in the FAQ section on bot creation.
