Spot Averaging with Profit Targets and Automatic Reversal

Summary

This strategy opens a spot position, places a profit-taking order, and adds to the position after an adverse move to bring its average entry price closer to the market. Parameters set the initial direction and amount, spacing between additions, desired post-add average price, profit target, order size limits, and polling interval. The document also describes restoring a saved position and optionally reversing direction when funds or coins run short.

The examples explain the long-side averaging logic and the repeated alternation between long and short positions after reversal. There are no performance results or backtest evidence. The document claims profitability only if ample capital is available for continued averaging, and notes that reversal can leave floating losses. It explicitly limits the method to spot trading, warning that applying it to futures can lead to liquidation. Its recovery and order-handling features do not remove the underlying risk of accumulating a large position during a sustained adverse market move.

Key ideas

• The strategy places a profit target and adds to a spot position at preset adverse price intervals.
• Each addition is sized to move the average entry price toward the addition price by a configured amount.
• When the account cannot fund another addition, automatic reversal can switch the trading direction.
• Saved position details can be restored, including direction, average price, quantity, and prior profit.
• The method depends on available capital and can accumulate substantial exposure during persistent price moves.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.