3. Auto Trade Concepts Guide

3. Auto Trade

Crypto-ML’s Auto Trade connects our trade signals directly to your exchange account. This guide helps you get the most out of our Auto Trade service by explaining some of the key concepts and principles.

For configuration information, please see Auto Trade Configuration Guide.

3.1 Getting Started

Crypto-ML’s Auto Trade connects our trade signals directly to your exchange account.

This means trades are executed on your behalf. This eliminates human error and lag.

There are three high-level steps for getting started:

  1. Sign-up for the Auto Trade Membership
  2. Connect your exchange account on the Auto Trade Exchange Setup
  3. Enable your trading selections on the Auto Trade Dashboard

Auto Trade is a secure solution that keeps you in control. Additionally, you only need to give it permission view and trade. You do not give it permission to transfer or withdraw funds.

The following gives a step-by-step walkthrough of getting started with Auto Trade, providing visuals for each step:

► View the complete Auto Trade Setup Guide

3.2 Choosing Your Trading Pair

Crypto-ML provides signals for four trading pairs.

Fiat optimizers:

Goal: increase your USD balance.

  • BTC-USD
  • ETH-USD

These pairs seek to optimize the quantity of US Dollars (fiat) that you hold by trading in and out of crypto at opportune times. The majority of the time, your funds are in fiat.

These pairs will become highly active during crypto bull runs and will be quieter during bear markets.

Crypto optimizers:

Goal: increase the quantity of cryptocurrency you hold.

  • USD-BTC
  • USD-ETH

These pairs seek to optimize the quantity of cryptocurrency (BTC or ETH) that you hold by trading in and out of US Dollar at opportune times. The majority of the time, your funds are in crypto.

These pairs will become highly active during crypto bear markets and will be quieter during bull runs.

By default, Auto Trade allows you to trade one pair. However, you can reduce risk by trading multiple pairs. This reduces the risk of one asset underperforming and the risk of one model underperforming.

Note: even though quotes are in USD, you may use USD, USDC, or USDT as your fiat trading pair.

3.3 How Much Is Traded

When a signal is generated, Crypto-ML will move all of your funds from one side of your selected pair to the other.

For example:

  • If a BUY for BTC-USD is generated, all of your available USD will be used to buy BTC.
  • If a SELL for ETH-USD is generated, all of your available ETH will be used to buy USD.

The caveat is Auto Trade leaves a small percentage (around 1%) each time a trade is executed. This helps ensure the order is executed. If Auto Trade instead used 100% of funds, it’s possible a small fluctuation in price will cause the exchange to reject your order due to insufficient funds.

Additional notes:

  • As mentioned above, USD will be substituted for your selection of USD, USDC, or USDT. Those are interchangeable.
  • If you do not have any funds in the asset when an alert is generated, you may receive a message noting “insufficient funds.” For example, if the order is to sell all of your BTC but you do not have any to sell, the exchange will notify us of this and we will pass it along to you.

3.4 Trading Multiple Pairs

To trade more than one pair, you can purchase our Multi-Account Addon. This will allow you to trade with up to five trading pairs, rather than choosing just one.

Diversification has been studied extensively and can reduce risk significantly with minimal impact on the expected rate of return (Modern Portfolio Theory – Investopedia).

With the Multi-Account Addon, you can, for example, have any of the following active in Auto Trade:

  • BTC-USD
  • ETH-USD
  • USD-BTC
  • USD-ETH

The two keys risks this helps mitigate are:

1. Risk of the underlying asset’s performance

There will be times when Bitcoin outperforms altcoins. There will be times when an altcoin outperforms Bitcoin. It’s also possible one cryptocurrency will entirely devalue. By having exposure to multiple cryptocurrencies, you reduce reliance on a single asset’s performance.

2. Model performance

Each Crypto-ML model is entirely independent. There will be times when one of Crypto-ML’s models performs relatively better and times when that model performs relatively worse. This could be due to a number of factors and is true of any trading system. By exposing yourself to multiple models, you reduce the risk of a systematic issue.

► Learn how to Configure Multiple Trading Pairs

3.5 Best Practices

In order to get the best results from Auto Trade and best match our Trade History, there are several best practices you should follow.

If you do not follow these best practices, your results may differ dramatically. Additionally, by following these steps, you should have better results in your trading overall as these best practices apply more broadly than just Auto Trade.

  • Best Practice 1: Trade on Binance (not Coinbase Pro) against USDT. This optimizes your fees and liquidity.
  • Best Practice 2: Further reduce fees by paying with BNB.
  • Best Practice 3: Use the Limit Order type but actively oversee and manage trades in case they do not fill completely.
  • Best Practice 4: Minimize emotional reaction to trades. Qualify on/off decisions with your personal strategy.

While these summarized bullets may be helpful, you should read this entire Auto Trade Best Practices post to understand the details. This is important because all traders are different and these recommendations may not be suitable for you.

► Read the Auto Trade Best Practices

3.6 Handling Drawdowns

Cryptocurrency is highly volatile. Volatility is required for trading but does open you to the risk of having the markets drop significantly after a position is opened. Knowing your options will help you effectively manage this situation when it occurs.

During drawdowns, you have three primary options:

1. Leave the position alone

Let Auto Trade close it when a “SELL” opportunity is identified by Crypto-ML’s systems. The position was opened for a reason. Even though there may be a temporary adverse event, it is possible the trade will still play out as expected and ultimately close for a profit.

The downside is the position may be open for an extended period of time and may still close for a loss. Additionally, you may face opportunity costs as your funds are “tied up” in the trade.

2. Manually close the position

If you want to cut your losses and not wait for a machine-generated signal, you can manually close your position by selling on your exchange. You may then also seek to manually capture winning trades as the market turns back around and ultimately syncs with Crypto-ML.

See how to Manually Trade Alongside Auto Trade for more.

3. Switch your goal by changing to the opposite pairing

This is the most sophisticated concept, but it does mitigate numerous risks. Crypto-ML has trading pairs with different goals. Changing your goal can help you take advantage of shifting market conditions.

If you are, for example, trading BTC-USD and facing a drawdown, you now have an open BTC position. If the market is falling and you believe it will continue to fall for an extended time, you may switch to the USD-BTC pair in the Auto Trade Dashboard. This other pair is ideal for falling markets and will attempt to accumulate BTC (rather than USD) as the market drops.

If the USD price of Bitcoin ultimately returns, you will ideally have more Bitcoin than when you started and therefore a higher overall portfolio balance.

To change your pairing, go to your Auto Trade Dashboard, pause Auto Trade, switch to USD-BTC (if you are on BTC-USD), then turn Auto Trade back on.

Learn more about Choosing Your Trading Pair.

3.7 Manually Trade Alongside Auto Trade

Auto Trade is designed to compliment your personal trading strategy. As such, you can manually trade at any time without interfering with Auto Trade.

For example, if Auto Trade currently has a position open for BTC-USD, that would mean your funds are in Bitcoin. If you decide to sell before Auto Trade does, that is fine. You can move your funds out of Bitcoin. Now, when Auto Trade does issue a SELL order, then it will find no funds to move. You will likely receive an “Insufficient funds for trading” notice, but that is okay.

Alternatively, you may sell 50% of your Bitcoin before Auto Trade does. In this case, when the SELL order is generated, Auto Trade will sell whatever Bitcoin you have left.

Auto Trade will not go out of sync. It trades alongside you. It simply moves any available funds between your pairing.

3.8 Leverage

Auto Trade does not currently support leverage. Crypto-ML is a US-based company and as such, we are limited in our ability to interface with higher-risk features enabled in other geographies.

If you want to utilize leverage or exchanges not supported by us, you may consider our Developer Membership, which provides streaming API access to our data. This allows you to connect to alternate exchanges and utilize leverage.

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