Interested in taking a more controlled, methodical approach to trading when using Deriv Bot? The Reverse D’Alembert strategy is the one for you.
It’s all about smart adjustments with the Reverse D’Alembert. This strategy increases your stake after each successful trade and reduces it after unsuccessful outcomes by a predetermined number of units.
We’ll go through how this trading strategy works on Deriv Bot, a trading bot that offers options trading on popular financial markets. You’ll discover the key parameters involved in applying the Reverse D’Alembert to your trading bot, how the strategy works, and how you can manage your risk with profit and loss thresholds.
Key parameters
The Reverse D'Alembert strategy in Deriv Bot uses these trade parameters.
Initial stake: The amount that you are willing to place as a stake to enter a trade. This is the starting point for any changes in stake depending on the dynamic of the strategy being used.
Unit: The number of units that are added in the event of successful trades or the number of units removed in the event of losing trades. For example, if the unit is set at 2 with an initial stake of 1 USD, the stake increases or decreases by two times the initial stake, meaning it changes by 2 USD.
Profit threshold: The bot will stop trading if your total profit exceeds this amount.
Loss threshold: The bot will stop trading if your total loss exceeds this amount.
How the Reverse D’Alembert strategy works
- Start with the initial stake. Let’s say 1 USD.
- Select your unit. In this example, it is 2 units or 2 USD.
- For trades that result in a profit, the stake for the next trade will be increased by 2 USD. Deriv Bot will continue to add 2 USD for every successful trade. See A1.
- For trades that result in a loss, there are two outcomes.
- If it was traded at the initial stake, the next trade will remain at the same amount as the strategy trades minimally at the initial stake, see A2.
- If it was traded with a higher amount, the stake for the next trade would be reduced by 2 USD, see A3.
Profit and loss thresholds
With Deriv Bot, you can set the profit and loss thresholds to secure potential profits and limit potential losses. This implies that the trading bot will automatically stop when it reaches either the profit or loss threshold.
This is a form of risk management that can potentially boost successful trades whilst limiting the impact of loss. For example, if you set the profit threshold at 100 USD and the strategy exceeds 100 USD of profit from all trades, the bot will stop running.
Summary
Effective trading with the D'Alembert system requires careful consideration of its stake progression and risk management. You can automate this approach using Deriv Bot, setting profit and loss thresholds to ensure balanced and controlled trading.
However, it is crucial for you to assess your risk appetite and test strategies on a demo account. This can help you determine whether the Reverse D’Alembert aligns with your trading strategy before transitioning to real money trading.
Sign up for a free demo trading account to test out this popular trading strategy on Deriv Bot. This demo account comes with virtual funds so you can test it risk-free before upgrading to a real money account.
Disclaimer:
Please be aware that while we may use rounded figures for illustration, a stake of a specific amount does not guarantee an exact amount in successful trades. For example, a 1 USD stake does not necessarily equate to a 1 USD profit in successful trades.
Trading inherently involves risks, and actual profits can fluctuate due to various factors, including market volatility and other unforeseen variables. As such, exercise caution and conduct thorough research before engaging in any trading activities.
The information contained in this blog article is for educational purposes only and is not intended as financial or investment advice.
Deriv Bot is unavailable to clients residing within the EU.
