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How does exchange rate tracking capital protection work?
Capital protection is implemented by the Profit Manager with a special trailing stop-loss offer, where the level of capital protection increases as the price rises - up to the entry price. Once the capital protection has reached the current price level at the start of the investment, the activation value of the trailing stop-loss sale is no longer trailing.
Let's see how the sliding stop-loss works through an example:
From your balance on the Binance exchange account, you launch an investment that buys Bitcoins on a case-by-case basis for 1 BTC at an exchange rate of 10,000 USD. You want to protect this investment, for which you set a 5% capital protection value. This way, if the exchange rate drops to 9,500 USD, the system will automatically sell the BTC for the stable coin you set. However, suppose that the exchange rate starts to rise before reaching the USD 9,500 price level or immediately after the investment and reaches the USD 10,500 price level. Then the activation level of the sliding stop-loss, which provides capital protection, slides upwards with the exchange rate and rises to USD 10,500 x 0.95 = USD 9,975. If the exchange rate would then reach USD 10,527, the capital protection value would stop sliding from there, since at this rate the capital protection would slide up to USD 10,527 x 0.95 ~ 10,000, which already guarantees the protection of the entire capital
What does it mean that I can set the expected profit level?
The Profit Manager allows you to activate a stop-loss order in the future, i.e. when the value of your investment reaches your target, our system will start to track the price with the risk level you set. If the uptrend is broken and the exchange rate falls, the system will automatically sell as many cryptocurrencies as you have made a profit on. Example: you have bought 1,000 USD worth of Bitcoin at a price of 10,000 USD. You have set an expected profit level of 20 percent and you only risk 10 percent of your profit, so if the price rise reaches 12,000 USD, the system will automatically activate the protection of your profit. Since you are willing to risk 10 percent of your achieved profit in the hope that the exchange rate might continue to rise, the system will start to track the exchange rate and if the exchange rate falls from the USD 12,000 level to USD 11,800, the profit will be withdrawn. Suppose you are very lucky and the exchange rate rises to USD 12,500. In this case, the system will track the exchange rate rise at a distance of 200 USD and when the momentum breaks and the exchange rate falls back to 12,300 USD, 230 USD worth of Bitcoin will be sold.
The system will also protect your investment after the profit is taken, i.e. it will withdraw your capital at the percentage level you specify below the profit take profit level.
Example: you have set a 10 percent capital protection, so if the exchange rate drops 10 percent from the $12,300 (take profit) level - to $11,070 - the system will automatically sell your Bitcoin investment.
How do capital protection and profit protection work together?
If you activate both capital protection and the expected profit level, the level of capital protection will be automatically adjusted after the profit is withdrawn, so that once you have realised your profit, your capital is not at risk.
Let's look at an example of how capital and profit protection work together:
As in the previous examples, you set a 5 percent (sliding) capital protection and a 10 percent expected profit (for simplicity, now without profit risk), and the exchange rate still starts at USD 10,000. As the exchange rate rises (up to USD 10,527), the capital protection level slides, at which point the capital protection reaches its maximum (i.e. USD 10,000, which was our starting rate). After that, even if the exchange rate rises further, the capital protection remains at USD 10,000, as from then on the full capital protection is ensured. The first profit exception occurs at the level of USD 11,000, where the system automatically recalculates and sets the new capital protection and profit levels according to the parameters previously set. Thus, the new capital protection will be the price level of USD 11,000 x 0.95 = USD 10,450, while the next profit level will be USD 10,000 x 1.1 = USD 11,000. Importantly, the capital protection will only slide with the exchange rate until the selling price level of the capital protection reaches the initial price level (in our case, USD 10,000). Thereafter, the capital protection will jump by 5 percent below the realized price level for each profit realization, but, since the capital protection is already secured, it will not slide further from there, even if the exchange rate rises further..
What does the Profit Manager methodology do?
Simply put, it is an improved version of the averaging investment methodology, i.e. we buy automatically at certain intervals, but we protect our invested capital and withdraw our profits when certain profit levels are reached, and then withdraw them when our capital is at risk. In technical jargon, investments are protected by a sliding stop-loss order whose activation level does not slip beyond the buy level of the investment. Profits are protected at the expected profit levels set by the investor by a sliding stop-loss order that is activated in the future. In the event of a fall in the exchange rate, the entire investment is not closed out, but only the profit is withdrawn first, and then, if the exchange rate falls further and the capital loses the level originally set, the capital is also withdrawn.
A series of stop-loss sell orders guard the protection of capital and profits, managed by the Profit Manager system independently of the Binance exchange, and only when action is required is the offer recorded