In this article, you will learn how you can create and run a Buy The Dip bot in order to accumulate base currency in a falling market.
"Buy the dips" means purchasing a coin after it has fallen in value. As the price drops, for many traders, it creates an opportunity to purchase more of that coin and increase their future gain when the price bounces back. Accumulating more of the base currency when the price decreases are considered one of the most efficient way for downtrend trading.
When do I need to use the Buy The Dip bot?
You can use the Buy The Dip bot if you want to increase the amount of the base currency for chosen pair, in situations when the price is decreasing.
🔑 Key Takeaways
Buying the dips refers to going long a coin after its price has experienced a short-term decline.
Buying the dips can be profitable in strong downtrends with repeated price bounces.
Dip buying can lower the average cost of owning a coin because the coin is purchased at a much lower price and in higher quantity.
The Buy The Dip bot generates profit in the form of the base currency, therefore the results are calculated in accordance with the amount of the base currency gained or lost.
The amount of the base currency on the account (both available and in open orders) is changed depending on the buy and sell order ratio of the active bot.
👉 How to create a BTD Bot
In this part, you will learn how to create and run your first BTD bot from scratch. Please, follow our step-by-step instructions below.
Step 1: Start a new bot and select the Buy The Dip bot
To start a new BTD bot, you need to click the [Start new bot] button located in the top menu of the Bots page.
You will see a pop-up window showing all the available bots that can be started. At this stage, you will need to select Grid bot.
From the list of all available grid bots, we need to select Buy the dip. This will reveal a new widget on the right corner of your screen where you will be able to adjust the settings of your BTD bot.
Step 2: Select Exchange and Trading pair
Please, select one of your connected exchanges, and pick the trading pair where you would like to create your BTD bot.
Step 3: Investment
Enter the total Investment value you would like to operate with. The investment value reflects both the amount of base and quote currency required to start the bot in form of the selected system currency.
📑 Note: You can change your system currency in the drop-down list on the top right corner of your screen.
Step 4: Trading Frequency
Select how often your bot needs to execute orders. There are currently 3 options available:
Slow: The slow mode will place fewer grids with the grid step of 3%. The bot will execute orders less often, but the profit will be bigger.
Average: The average mode will place grids with the 1% grid step. Balanced profit per trade option.
Fast: The fast mode places plenty of grids with the 0.3% grid step. The bot will execute a lot of orders per day, but the profit from each trade will be smaller.
💡 Pro tip: If it is your first BTD bot, we recommend you to start with the Average option and then decide the frequency for your next bot based on the received results.
📑 Note: It is not possible to modify the number of grid levels and the grid step in the BTD bot as it comes with pre-defined settings that are optimal for every trading pair. However, you can always create your own customized BTD version of the bot using the Custom bot instead.
Step 5: Protection (optional)
You can set extra protection to secure your profit when the specific amount is reached or leave the market completely to avoid any further losses if the price goes in the opposite direction. These are optional features but definitely worth trying when you want more control over your bot's operations.
💰 Take Profit
Take Profit is an order designed to manage your risks where the system stops the bot and buys all the base currency back when the Take Profit condition is met. Once the “Current Funds” of the active bot reaches a specified profit percentage that you set in a Take Profit field, the following actions take place:
The bot cancels all open orders.
Place a market buy order for all the remaining quote currency used by the bot and purchase the corresponding amount of the base currency.
The bot is moved in the Spot History with the Take Profit status
🚫 Stop Bot
Stop Bot is the opposite feature of the Take Profit. You will have to specify the price that will become a trigger for the bot. When the market price continues to go downwards, the Stop Bot feature will trail down as well. Once the trigger occurs, here is what going to happen:
The bot cancels all open orders.
Place a market buy order for all the quote currency used by the bot and purchase the corresponding amount of the base currency.
The bot is moved in the Spot History with the Stop-Loss status.
📑 Note: The Trailing Down feature is enabled by default for the BTD bot. It is not possible to deactivate it.
Step 6: Start
When you are ready, click the [Preview Bot] button to create your first BTD bot. You can backtest your bots to see how your bot would have performed in the past with chosen setting. However, please note, that the Backtest results are based on past data and don't indicate future results.
📑 Note: Before moving forward, we highly recommend checking the following figures to understand the required balance you need to have to launch your bot, and how much balance you have available. Do not worry, if you see a negative entry, it means that the system will purchase the necessary balance before starting the bot.
In sell orders: Indicates how many coins (base currency for sell orders) are required to start a bot with the selected settings.
In buy orders: Indicates how many coins (quote currency for buy orders) are required to start a bot with the selected settings.
Remaining balance #1: Represents the amount of the base currency that will be left on your available balance once you launch the bot.
Remaining balance #2: Represents the amount of the quote currency that will be left on your available balance once you launch the bot.
Step 6: Preview
This is the final step of creating your BTD bot, no further changes need to be made. Here you can review all the selected settings and run your bot if they suit you. Click the [Confirm] button to create your BTD bot.
🤔 When to use the BDT Bot?
The BTD bot strategy is a perfect solution to accumulate more base currency on the downtrend. With the BTD bot, you can lock in a lower average cost for coins of a particular cryptocurrency.