Trading is the core feature of WolfBot. Trading generally means to buy an asset at a low price and sell it a a higher price. There are 3 types of trading in general – and also with crypto currencies:
WolfBot will buy and sell crypto currencies as defined by your trading strategies.
Margin trading means you can trade with more capital. To do this you have to place some funds on the exchange as collateral. You are then borrowing additional funds on the exchange to leverage your trading capital (2x, 3x,…). Therefore your profits and losses will be leveraged by that factor.
Furthermore margin trading offers the ability to do short selling. This means you borrow a coin and sell it with the goal to buy that coin later at a lower price. The reduction in the coin’s price is your profit, so you are making profits during falling crypto markets.
WolfBot supports all these margin trading features out-of-the box. You only have to place some funds on the exchange and WolfBot can do the borrowing and selling/buying automatically for you.
Trading future contracts on crypto currencies is similar to margin trading. Here you don’t trade any coins, but instead a long/short contract – that is a contract to buy or sell a particular coin at a given price. Future contracts are usually settled on a given data which means your gains or losses will be finalized. Futures are usually highly leveraged (10x, 20x, 100x,…) so they offer the potential for huge gains relative to the invested capital. This also makes them an ideal tool as insures, that is to protect (or hedge) the crypto currencies you are holding against a price fall. Because of the high leverage you can insure large amounts of your crypto currencies for a relatively small price. By doing this you can keep holding your coins and profit no matter in which direction the market is going: Either it goes up and the value of your coins increases or it goes down and your short future contracts will give you profit. You can then use that profit to buy more crypto currencies at the now cheaper price.
Additionally WolfBot supports 2 more trading modes. These work differently since the goal here is not to “buy low and sell high”. This means these trading modes have a much lower risk of losses, but your maximum gains will also be lower. The 2 modes are:
Arbitrage means WolfBot will look for price differences on 2 Exchanges. It will then buy crypto currencies on the cheaper one and sell it on the more expensive one.
Lending means WolfBot will offer loans of your crypto currencies on the lending market of supported crypto currency exchanges. Your profit is the interest you earn on those loans – simple and safe compared to trading.