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3Commas Practical Guides: How to use Smart Cover to increase profit during a trend
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How many times did you catch yourself thinking that you should have bought more of a certain asset while watching its rapid growth? In this “3Commas Practical Guides” article, we will discuss how you can conveniently increase and compound your position to gain even more profits while following a trend with the help of 3commas.io tools.
Take advantage of price pullbacks; while in a trend, we often want to buy an asset and start building a position in anticipation of further upward price moves. The Smart Cover function, introduced by 3commas.io, allows you to sell an asset during areas of anticipated price pullbacks and then re-buy it once price starts trending again.
Not only will this allow you to lock in profits made already, but you can release equity to increase your position size should a next wave up occur.
You can analyze the chart of the desired asset and configure all the settings in the Smart Trade section of the side menu. First, you need to choose an exchange to trade on. You can always try the functionality first with a Paper Trading account:
For example, we saw that the Bitcoin price is in an uptrend and has reached a local correction point. We have also determined that the BTC price will undergo a correction to $9520. We take our risk management into account and set the following parameters in the Smart Cover tab:
- size of the position and the price at which we want to sell and buy back the BTC (Take Profit);
- price at which the asset will be bought back if the trade plan fails, and the price continues higher (Stop Loss).
After we create and confirm the deal, our trading plan will be automatically executed:
All orders, depending on the selected type and quantity, will be triggered according to the specified settings. When this trade completes, we can then use the Smart Sell tool and create a new trade plan if we believe the price will continue trending up. It is at this point, we can decide if we will increase the position size, by reinvesting the profit into the asset, or trade with the same amount of capital when we initiated the first trade.
The dynamic and unpredictable world of digital assets and cryptocurrencies consistently presents us with opportunities and challenges. In the midst of the excitement surrounding price fluctuations, one of the primary concerns for many traders is the ability to leverage these movements effectively, in order to maximize potential gains without incurring unnecessary risk. The recent introduction of the Smart Cover function by 3commas.io illustrates a thoughtful response to these concerns.
In essence, the Smart Cover function acts as a strategic tool in a trader's arsenal, designed to navigate the ebb and flow of a trending market. The primary appeal of this function is its capacity to allow traders to adapt to pullbacks within a trend. These pullbacks, or moments when the price dips temporarily before potentially resuming its upward trajectory, can be a double-edged sword. On one hand, they provide opportunities for traders to enter or increase their positions. On the other, they can cause concern regarding potential losses.
This is where the unique capabilities of the Smart Cover function come into play. By offering traders the ability to sell an asset during anticipated pullbacks and repurchase it once the trend seems to resume, it provides a structured method to harness these market dynamics. Such a mechanism not only offers the possibility of locking in gains but also an opportunity to reallocate funds in anticipation of the next upward movement. The flexibility to adjust position sizes, based on the previous trade's outcome, provides further adaptability in trading strategies.
Furthermore, the process of setting up the Smart Cover function has been designed with user-friendliness in mind. The platform’s provision for practicing these functionalities on a Paper Trading account emphasizes its commitment to user education and safety. Such features allow traders, regardless of their experience level, to make informed decisions, potentially minimizing inadvertent risks.
The Smart Cover function, as described in this "3Commas Practical Guides" article, showcases the innovation that the platform is bringing to the trading world. It underscores a forward-thinking approach that integrates technology and strategy, aiding traders in navigating the often tumultuous waters of cryptocurrency trading. Given the ever-evolving nature of this domain, tools like these, which focus on both adaptability and security, can prove invaluable.
Finally, it's crucial to note that while the Smart Cover function offers a robust and thoughtful method for managing trades, every trader's journey is unique. Due diligence, continuous education, and understanding of one's risk appetite are fundamental. As of 2023, the strategies and tools mentioned here reflect the current advancements in the trading ecosystem. As always, staying updated and adaptable is key.
Good luck, everyone! See you in the next 3Сommas Practical Guides!