How to avoid liquidation of a futures bot

Let’s imagine that your futures bot, launched with the Long algorithm, has filled the entire grid of orders and the liquidation price is very close.

There are several ways to save the situation.
Let’s look at some of them:

1st method

Split the margin

Transfer additional funds to the futures balance to replenish the safety margin. The more funds transferred, the further the liquidation price will move.

2nd method

​​Manually open an opposite position in the same coin with the Short algorithm

To do this, you need to go to the Binance terminal.

It is recommended to indicate the volume of the Short position (number of coins) at first small – approximately 30-50% of the volume of the Long position. If the decline continues, additional short volume can be opened later, thereby moving the liquidation price even further.

We get the following situation:

As you can see, the liquidation price decreased – it was 97.31, and after the opening of the Short position it became 82.54

It is important to note that the use of the Short position primarily serves to save from liquidation. And only if you have the proper experience on Short, you can make money – when the fall stops, you can close the Short position, fixing the profit and thereby replenishing the margin for the Long Bot.

Warning!

After opening a Short position, you need to put a stop loss (the stop price is approximately 1.5-3% of the entry price) to close the position if the market turns up sharply! (for this purpose, a small volume of Short is first opened to get a small loss on the stop).

3rd method

Gradual reduction of the Long position

Warning! The method is obviously unprofitable, but it allows you to avoid complete liquidation and save part of the balance.

If the price continues to fall, then you can sell the Long position in parts. To do this, you need to go to the Binance terminal and find the section for closing the transaction in the upper right part of the screen.

It is recommended to sell the position on the upward chart rollbacks, then the loss will be slightly less.

P.S. General recommendations for trading bots in the futures market:

• Strictly follow risk management. Without accumulated experience, do not use large leverage over x10.

• Use for trading only coins with large capitalization, which are not subject to sharp price fluctuations within a short period of time (BTC, ETH, BNB, etc.)

• When launching the bot, ensure that there are free funds on the futures balance, which will be used as a maintenance/safety margin.

For example: after specifying the bot’s deposit of $100, keep at least $200 on the futures balance (deposit/margin ratio is 1 to 1

leverage from x1 to x5 – deposit/margin – 1 to 1
leverage from x5 to x10 – deposit/margin – 1 to 2
leverage from x10 to x15 – deposit/margin – 1 to 3
leverage from x15 and above – deposit/margin – 1 to 5 and more

• Do not run futures bots with the Short algorithm!

• When creating a futures bot, use a larger price change overlap than for a spot bot – from 30% or more. – Monitor Liquidation Price and Margin Ratio in Binance Terminal

Do you want to better understand Veles bot strategies and the market? Learn our Wiki: https://help.veles.finance/en/