This article will focus on a trading strategy that involves accumulation.
TradingView and Alertatron are two of the programs we will be using to help you build an ever-growing profitable long position with a semi-automated “Accumulation Bot”.
The strategy is relatively simple, when done correctly, you can accumulate a growing long position while lowering your average entry point.
This strategy is executed on FTX exchange (our preferring futures exchange)using perpetual futures contracts.
You could also do this on Binance futures or similar.
Steps to Build and Accumulate a Position
When would you do this?
You do this when you expect the asset to be going up and you want to accumulate the asset at lower prices.
Unlike a regular trade where you place a stop loss and a take profit, this trade is built over time and can withstand many ups and downs in the market.
Position sizing is key as entering with a position too large may cause you to have to exit at a loss for fear of liquidation.
Start with a relatively small long position.
In my case I am currently building a long BTC position so I started with 0.2 BTC after a pullback.
I am executing this on Dec 1221 futures contract to avoid funding fees.
Here’s How it Works
We use Alertatron to start a ping-pong order of “1” quantity. Which is actually 2 limit buys.
The 2 limit buys are placed, 1 near price and 2nd one $26 dollars away.
When the buys are hit opposite sell orders $100 away are placed.
We set the code to execute indefinitely.
This way, once the sells are hit, they immediately place new buy orders and the process repeats.
Here is the Alertatron code we are using.
pingPong(side=buy, pingAmount=0.06, pongAmount=0.058, from=0, to=26, orderCount=1, pongDistance=100, endless=true);
Sizing is important
Notice we used 0.06 for the buys and 0.058 for the sells. This size is intentionally small so that in the event our buys get hit and our sells do not, we are fine with it because we expect BTC to return to these areas and complete the loop.
Also notice they buys are slightly bigger than the sells. This allows up to increase our position slightly each time this is executed.
Once in larger profit we will flip the numbers and sell a little more than buying, thereby driving our average entry much lower.
Canceling the Process
To cancel the process, simply cancel open orders directly on the exchange.
What does this do for you?
We nicknamed these “boobie-traps” because we place them in areas of price congestion with the hopes that they execute several times before BTC moves to its next level.
Each time it executes not only buys but also sells, your average entry is pushed down.
Starting the “Boobie-Trap”
First you want to identify areas of congestion on the chart and draw horizontal lines.GIF Video Here
You can wait for price to get there and then fire the alert manually from inside Alertatron on the saved and manual alerts page.
Or you can set alerts to trigger the boobie-trap from Tradingview once price reaches the areas.
In order do do this, place the alert on chart like video above, add the alert to fire once.
Place your unique Alertatron webhook into the alert and the code into the message area.
Things to Watch out for
Don’t place the boobie-traps too close together or they begin over-lapping.
Keep tabs on your position size, if it begins to get too large then you can go heavier on the sell side.
Always have a risk management plan.
Always have stop losses to protect capital.
Don’t place stops too close because you are almost guaranteed to get hit and then you have to start all over.
Depending on how large our position is, we may have a stop to take off 70% of the position about 3% below our average entry.
We lay in manual buys in front of stop loss, so if we go negative for a bit, we can still better our position.
If stop gets hit, we have small loss and now have a mush smaller position which means we can easily work this position back to where we want it.
This actually happened recently…
Notice the boobie-traps that have fired bit the sells have not closed.
Once price reaches those, our average entry gets pushed down quite nicely.
With any luck we can build a very nice size long position in BTC.
Our goal is to get the position average under $20k.
Stop Trading Like Everyone Else
99% of traders enter a trade with the idea that they will win or lose.
Either it hits TP (take profit) or SL (stop loss).
If you think about this, its a pretty arrogant way of trading.
You are saying you know where the market is going to go.
There’s a reason that even the best technical analyst don’t trade.
Because it’s almost impossible.
I’m not talking about HODL or buying some coins and selling later for profit.
That is investing.
That is not trading.
I mean actively trading intra-day or swing trading.
If you are confident on a direction then start your position with a 1/4 or 1/2 of what you would normally enter with.
Save the rest to scale-in when the trade starts to go against you.
Use liberal stops behind key levels on chart. Stops too tight are almost always hit.