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Stop Loss & Take Profit

BozoBot offers a powerful and flexible system for automating exit strategies through its Stop Loss and Take Profit capabilities. This feature allows you to protect your capital and lock in profits without constant manual monitoring.

How It Works​

BozoBot's Stop Loss and Take Profit functionality is controlled through the TRADING_LEVELS parameter in your .env file. This parameter allows you to define multiple price points at which the bot will automatically execute trades.

# Trading levels syntax:
# -30%:100% - on -30% sell 100% | 40%:100% - on 40% sell 100% | -10%:0.1SOL - on -10% buy 0.1 SOL
TRADING_LEVELS=-30%:100%,40%:100%

Each trading level consists of two parts separated by a colon:

  1. A percentage change from your entry price
  2. An action to take at that price point

Basic Usage​

Setting a Simple Stop Loss​

To set a stop loss that sells your entire position if the price drops by 30%:

TRADING_LEVELS=-30%:100%

This instructs BozoBot to sell 100% of your position when the token price falls to 30% below your entry price.

Setting a Take Profit Level​

To automatically sell your entire position when the price increases by 40%:

TRADING_LEVELS=40%:100%

Combining Stop Loss and Take Profit​

The most common configuration combines both stop loss and take profit:

TRADING_LEVELS=-30%:100%,40%:100%

This will:

  • Sell 100% of your position if the price drops 30% (stop loss)
  • Sell 100% of your position if the price increases 40% (take profit)

Advanced Strategies​

Tiered Take Profit​

You can create a tiered take profit strategy to gradually exit a position as the price increases:

TRADING_LEVELS=-30%:100%,20%:25%,40%:25%,60%:25%,100%:25%

This strategy:

  • Sells everything if price drops 30% (stop loss)
  • Sells 25% of your position at 20% profit
  • Sells another 25% at 40% profit
  • Sells another 25% at 60% profit
  • Sells the final 25% at 100% profit

Averaging Down​

You can configure BozoBot to buy more of a token if the price drops to a certain level:

TRADING_LEVELS=-50%:100%,40%:100%,-15%:0.02SOL

This strategy:

  • Sells 100% if price drops 50% (stop loss)
  • Sells 100% if price increases 40% (take profit)
  • Buys an additional 0.02 SOL worth of the token if price drops 15% (averaging down)

Complex Multi-Level Strategy​

For advanced traders, you can combine multiple buy and sell levels:

TRADING_LEVELS=-60%:100%,-30%:0.01SOL,-15%:0.02SOL,25%:30%,50%:30%,100%:40%

This complex strategy:

  • Sells everything if price drops 60% (ultimate stop loss)
  • Buys more (0.01 SOL) if price drops 30% (first averaging down)
  • Buys even more (0.02 SOL) if price drops 15% (second averaging down)
  • Sells 30% of position at 25% profit (first take profit)
  • Sells another 30% at 50% profit (second take profit)
  • Sells remaining 40% at 100% profit (final take profit)

Best Practices​

For Beginners​

If you're new to trading, start with a simple configuration:

TRADING_LEVELS=-30%:100%,40%:100%

This straightforward approach limits your potential loss while allowing for reasonable profit targets.

For Intermediate Traders​

As you gain experience, consider a staged take profit approach:

TRADING_LEVELS=-30%:100%,20%:50%,50%:50%

This locks in some profit early while allowing the remainder to potentially grow further.

For Advanced Traders​

Experienced traders might implement a more complex strategy with multiple levels:

TRADING_LEVELS=-40%:100%,-20%:0.02SOL,20%:30%,50%:30%,100%:40%

This approach uses averaging down and multiple take profit levels to maximize potential returns while managing risk.

Tips for Effective Use​

  1. Consider Market Volatility: In more volatile markets or tokens, wider stop loss levels may be appropriate to avoid being stopped out by temporary price swings.

  2. Align with Your Strategy: Your trading levels should reflect your overall trading strategy and time horizon:

    • Short-term traders might use tighter stops and take profits
    • Longer-term traders might use wider stops and higher take profit targets

  3. Backtest Your Levels: Before implementing in real trading, consider how your chosen levels would have performed in past market conditions.

  4. Adjust Based on Token: Different tokens have different volatility profiles and may require adjusted levels.

  5. Balance Risk and Reward: Ensure your potential profit (take profit level) justifies your risk (stop loss level). A common approach is to aim for a reward-to-risk ratio of at least 2:1.

Risk Management Considerations​

  • Capital Protection: Always set a stop loss to protect your capital from significant losses.
  • Partial Takes: Consider taking partial profits at multiple levels rather than an all-or-nothing approach.
  • Averaging Down: Be cautious with averaging down strategies, as they increase your exposure to failing tokens.
  • Realistic Targets: Set take profit levels that are realistically achievable based on the token's historical performance and current market conditions.