How to with Arthur: Maximize your growth potential: the liquidity model
BOTS wants to make sure that everyone in the world has the opportunity to build a second, passive income through investing. To do so, we need the help of our bot creators. But what can you expect from us, what do we expect from you, and how do things work? Let's tell you all there is to know.
Let’s start with market liquidity: what is it, what’s the difference between larger and smaller coins, and how can you maximise your growth potential on the BOTS app? Sounds complicated?
About volumes and market caps
Let’s start with looking at CoinMarketCap as this will give us a great example of the volumes of different coins. In the below screenshot, you’ll notice XRP on top right away. On the right-hand side, you’ll see the volume at that moment in time (keep in mind this can change daily). As you might notice, the volume of XRP was a lot higher than the Bitcoin volume at that time. Meaning: XRP was traded more often than Bitcoin was.
Next to the volume, you’ll see the market cap (or, in other words: market value). In this example, Bitcoins market cap is higher than XRP’s. Why does that matter? Let us explain:
Selling a million dollars worth of Bitcoin: this is how you do it.
So let’s say you have a million dollars worth of Bitcoin, and you’re ready to get rid of it. If you look at the Bitcoin stats in the screenshot below, they tell you that there are many volumes available: all within the 20K to 500K range, and they’re all being sold at high prices. As you can see, there’s 242K Bitcoin being sold at 45280, and 500K Bitcoin being traded at 45300.
As you can see, it’s a big market and there’s a lot of demand for Bitcoin. Meaning, you could sell your million dollars worth of Bitcoin reasonably quick. You could, for example:
- First, sell 83K Bitcoin for the price of 45320;
- Followed by another Bitcoin sale of 126K, for 45310;
- And so on — until you’re flat out of Bitcoin!
Stuck in a market position: unable to sell
But what if you’d have a million dollars worth of Cake (not the food, the cryptocurrency)? Even though the price levels of Cake aren’t too bad, the volumes are a lot (and we mean: a lot) lower than those of Bitcoin.
In this scenario, you’d have to:
- First, sell 5,1K of Cake for 27,61;
- Followed by another Cake sale of 2,3K for 27,605;
- Followed by another Cake sale of 1,2K for 27,600;
- Followed by another, and another — only to end up with at least 70K Cake left in your crypto wallet…
Because of the amount of Cake that you have and want to get rid of, you will (whether you like to or not) influence the price of Cake in the market at that moment. Not only that, but you will most likely also end up completely stuck in your position with more Cake than you can handle.
So what is market liquidity?
See where we’re going? This, ladies and gentlemen, is market liquidity: the ability to quickly purchase or sell your assets without causing a drastic change in the asset’s price. So, in other words: at what price can you buy, and how quickly can you sell?
Timing is everything, and getting in at the right price is crucial. Taking the million dollar’s worth of Cake example, you would get very stuck in your position, without any real quick opportunities to get out.
And in all fairness: if the market crashes, you’d like to be able to get out as soon as you can. Something that would be nearly impossible when stuck with all that Cake!
The BOTS liquidity model
Now, to prevent these icky Cake-situations from happening, the BOTS app works with a liquidity model. It is constantly analysing the assets that you’re trading regarding the available liquidity. It’s a formula that calculates how much liquidity, on average, is available in these markets always to make sure that positions can be exited when needed.
Or, in other words: you’ll never have too much of something. When crap hits the fan, and you want to sell all you’ve got, the liquidity model will have made sure that you’re able to — without having to face massive losses.
This way, we can maintain the quality standards at the BOTS platform. If something goes wrong, the users can always exit their positions — by doing so; we do everything we can to safeguard the investments of our users.
Join the BOTS community
Now, do you have any questions about the bots in the BOTS app? Please reach out to our support team. You can contact them right here. Or, if you’d like a quick fix, you can check the FAQ on our website, our YouTube channel or join other BOTS users at the BOTS Discord channel!
Are you an ambitious bot creator, and would you like to know how to get things started? Check our bot creator page!
BOTS is a tech company that has developed an app that makes it possible for anyone to start investing. You only need €50 to get started. BOTS uses automated trading strategies based on algorithms. We call these algorithms bots. These bots are tiny superheroes: they make automated investing accessible to everyone. With their help, you can invest in cryptocurrency within minutes — without any knowledge! And we’ll do you one better… In 2021, you’ll also be able to invest in stocks and other currencies through the BOTS app.
The app is free to download and quick and easy to install. BOTS currently operates in more than 15 countries, and by the end of the year, BOTS wants to be active in at least 60 countries and four continents.
Need any help with anything?
Even though automated investing is incredibly easy, you might need some time to find your way around the app and discover all the options. So if you still have questions wandering around your mind, or you just can’t seem to figure it out, please do not hesitate to contact the BOTS support department.
Don’t feel like calling our support team? Just head to the BOTS YouTube channel and browse through the dozens of instructional videos that may help you further. You are also royally invited to the BOTS Discord channel.
Ready to get started?
There is no such thing as risk-free trading. It is possible to lose (part of) your stake.