When trading crypto in 3Commas using bots there’s a benign setting called “Max active safety trades count” that most people leave set at the default value of “1”. Here’s why you need to crank this setting up…
When you’re setting up your trading bot in 3Commas there’s a setting called Max active safety trades count that appears next to the Max safety trades count. It appears pretty benign, and most people ignore this setting and leave it set at one. Here’s a screenshot of the setting:
First, let me explain what this does before I explain why you need to set this higher. Basically, this setting tells your bot how many of your safety orders to place at one time. For example, if you’ve set a total of five safety trades, and this is set to one, then the bot will wait until the first safety order is executed before placing the second one. When the second safety order is executed, then the third is placed, and so on. This way only one safety order is on the books at any given time.
Now consider the case when the Max active safety trades is set to the same as the Max safety trades count. With this, all of the safety trades are placed at the exchange as soon as a new deal is triggered and the base order is executed. In terms of how this affects the bot, your deal, or the funds required for each deal, well… there is no impact at all. It makes no difference. However, there are two advantages, one minor one, and one major one.
Two Advantages to Maxing Out the Active Safety Trades Count
First, the minor advantage.
When your bot places all of your active trades on the books at the start of the deal, the base currency required to execute the trades are moved into “reserve”. You can see that in the “Balances” section on the “My Deals” section (active deals made by your bot).
If you have the Max active safety trades count set to one, the funds to execute additional safety orders remains in the “Available” column, so you really don’t know if you have enough funds to execute all your safety orders, or you end up using some of your base currency for other trades, mistakenly thinking you had enough base currency. When your Max active safety trades count is equal to your Max safety trades count, the funds are put in reserve and are not available for other trades. This also helps you identify if you’re short of base currency long before your safety trades execute.
Second, the major advantage.
I’ll illustrate this with an example. Now, keep in mind this doesn’t happen very often, but I changed my own philosophy on this setting only two weeks ago and it’s already paid off. Here’s a screen shot of a bot deal from today:
Doesn’t look like much right? However, if you’ve taken The Better Traders Account Building course, you’d immediately see the Fat Finger trade. Capitalizing on Fat Finger trades is usually a long shot, but by setting your Max active safety trades count to match your Max safety trades count, you’re in a position to catch those Fat Finger trades when they happen.
Here’s a markup of that screenshot:
- This is the point where the trade started. You can see it’s near the top of some recent highs, and testing those highs, so breaking past those was going to be tough. Perhaps in the long run it would work, but you know I like my trades fast. Either way, there was a long way to go before my original take profit point.
- This is the Fat Finger drop. For some reason, someone put in a sell order WAAAY to low for the current market price. It happens, but not often. Usually there’s not much on the order book below a certain point, so when a trade like this happens it tends to clear out the buy orders pretty quick.
- This is where my bot had already placed the safety order on the books because my Max active safety trades count was equal to my Max safety trades count. Because the buy order was already on the books, it got executed by Mr. Fat Finger’s fat finger trade. If my safety order was not on the books, the delay between exchange, bot reaction, API reaction, etc., would have been too long to catch this dip.
- As a result, my Average Buy Price immediately dropped well below my original base order, which in turn brought my Take Profit point all the way down to the resistance line. Ultimately, this meant a fast trade and not having to count on a resistance break out to take profit.
By the way, this was for USDT_XLM that traded today (June 10th, 2020) on Binance, and it made a net profit of 0.68% in under an hour.
I hope that helps explain why you should be setting your Max active safety trades count was equal to my Max safety trades count.
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6 thoughts on “Why Setting the Max Active Safety Trades to More than One is Important”
Nice explanation. So are there any reasons to not always max the active safety trade? In other words what’s the setting slider for?
If I’m not mistaken, when you set the max active trades lower, the funds for those pending trades are not reserved. So you could use those funds for other bots, playing a careful balance of your bots trying to use more funds than you have – may work if your mix of deals don’t all go in the same direction. But, you may not have those funds available when you really need them. Really depends on how you want to play it. For spot trades it’s not a big deal since you can always manually place a safety order later, but for futures or leveraged trading when there’s a risk of liquidation, I would prefer to have those funds reserved for that deal.
Really helpful explanation, great article.
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Nice article. I feel like the moment you do what you suggest then you might as well just use the grid bot. I use DCA bot to maximize my use of funds. Meaning I do not want my bot to sit on reserve money. In my mind that is money that is in a savings account with zero interest. Seems more profitable to have more bots running on funds I do not have. How can you beat what feels like free borrowed money?
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Sitting on reserve funds is definitely one downside, yes. The grid bot is not really an equivalent though since it really only works well on sideways action. Any other trend and the grid bot just stops working.
The other downside to using those “borrowed” funds in your method is when the market dips (in tandem – as it usually does) your bots aren’t able to properly DCA, which is the point of DCA’ing, ie to close out sooner and capture more upside instead of waiting for full price recovery. If only a portion of your bots are able to DCA, as they’re under-funded, then you might as well just buy and hold on leverage instead. By “borrowing”, you take away the sole purpose of your bots’ existence.
I’m not saying your strategy doesn’t work, it certainly can and does, you just need to be careful how much you over-extend, and make sure your bots are not trading coins/tokens that move together, or correlated.
[…] count – I’ve already explained why I match this to the Max safety trades count in this post. Not explained in that post is the fact that having the trade already on the exchange reduces […]