TradeSanta offers two types of bots, Grid and DCA, both of which can execute long or short strategies to generate profits.
When you use a long strategy, the bot buys coins and waits for their price to increase before selling them for profit. The profit is in the quote currency, which is the second currency of the pair on your chosen cryptocurrency exchange. For instance, if you buy BTC with USDT, USDT is the quote currency and you receive profit in USDT when the BTC price goes up. The bot needs access to the quote currency in your account to perform trades.
On the other hand, a bot using a short strategy will sell the coins you have and buy them back when their price falls. This allows you to profit from the difference in the price of the coins, as with long strategy. However, to use the short strategy, you must have the base currency (first currency of the pair) in your account. For example, to create a short bot for the BTCUSDT pair, you will sell BTC to buy it back later at a lower price. The profit from the price drop will be in the quote currency.
It's important to note that shorting in automated trading is different from the traditional definition of shorting. Traders in traditional markets typically short with borrowed money and return the same amount, whereas in automated trading, you can only short coins you have in your balance.
It's crucial to select a strategy based on the trend of the crypto pair. If technical and fundamental analyses of a coin indicate an uptrend, a long bot would be appropriate as the price of the coin is expected to increase. On the other hand, a short bot is preferable when there are indications of an asset's potential loss of value.
Traders can mitigate risks by setting up both long and short bots simultaneously. However, they must ensure they have sufficient base and quote currency in their account to set up bots in two different price directions. Additionally, some coins may not be shorted since they are traded as quote currency only, such as USDT or BTC on some exchanges.