Limit your losses and guarantee profits in Automate
It’s not easy to define where the crypto market will move in the future. Sometimes, it seems the chance of a bullish and bearish direction is equal. Different types of orders are used on both centralized and decentralized exchanges to minimize risk trading in a highly volatile market. You may know pending orders, market orders, stop loss, and take profit orders.
If you’re not able to monitor your portfolio closely, a Stop-Limit Order can help you stay on top of market movements by automatically triggering a buy or sell order if and when it reaches a specified price. Once the price is attained, the order is automatically triggered. For example, let’s say that you identify a specific pattern and decide that a move above or below the current price would present a trading opportunity. You could use that information to set the trigger when the price hits a certain level. For buy orders, this means buying at the limit price or lower, and selling limit orders means selling at the limit price or higher.
When you can’t predict the upcoming market direction, it’s worth placing two opposite orders, one of which will work and another which will be deleted simultaneously. That’s why another type of order called One-Cancels-the-Other or OCO Order was invented.
Automate
Although it does sound good for exchanges, is it possible to take advantage of automation while keeping your crypto in the wallet, thereby saving on transaction and trading fees? As you may already know, ChronoLogic has released a new version of Automate, a tool designed to facilitate conditional scheduling on the blockchain and prevent users from overpaying for gas. In Automate, you can specify at which point in time your transaction has to be executed. And although the time condition seems to be quite an interesting use case, what really interests us here in terms of trading automation — is price.
Adding the price condition to Automate would enable users to determine a certain target price at which their transactions have to be triggered. It could be a great tool that people use to mitigate trade risks by specifying the highest or lowest price they are willing to accept. For those who are looking to buy, this would mean buying as soon as the price drops to/below the specified target price. This would mean selling as soon as the price climbs to/above the target price for those who sell.
This feature would allow users to control the price at which their transactions are executed. In other words, it would guarantee a trade at a particular price. The price condition could be used to limit losses or guarantee profits by ensuring that a token is sold before it falls below purchasing price. And this is all done without crypto leaving your wallet!
Use case
Even though the Price Condition feature is not yet implemented, let’s take a look at a couple of probable scenarios where you can trade your ETH for USDT at Uniswap using Automate.
You're able to add a custom Metamask network in Automate so that your transactions are captured by the Dapp before being executed. Next, in the draft mode, you can tweak the parameters of transactions and change their conditions according to your needs. You could specify a certain condition for each transaction to tell Automate at what price it should be triggered. Let’s call these conditions «buy price limit» and «sell price limit».
Buy Price Limit: It can be used to purchase a token if the price hits a specific point or lower. It helps you to control the purchase price once you’ve determined an acceptable minimum price per token.
For example, if you intend to buy ETH that is valued at $3000 and is expected to go down later in the day, you can put a price condition at $2900. It means that once the price reaches $2900, the trade is executed by Automate.
Sell Price Limit: It can be used to sell a token when its price climbs up to a specific point or higher. A sell limit tells Automate to sell the token if the price increases to the specified price condition or higher.
For example, if the current price per ETH is $3000, you can set a price condition at $3100. The Uniswap transaction is triggered when the price climbs to $3100.
Conclusion
As you might have noticed, this functionality is very similar to placing stop-limit orders on different exchanges. Scheduling both «buy» and «sell» transactions in Automate with different price conditions for the same amount of token could eventually turn into something resembling an OCO order.
If your trading priority is a guaranteed price, then this could be a useful feature. Please let us know in the comments below if you’re interested in adding Price Condition to Automate.
