Today we're going to explain a crucial yet often misunderstood concept: Return on Equity, commonly known as ROE. By the end of this article, you'll understand what ROE is, why it's useful and how it can guide your trading decisions.
Tip: Understanding ROE will enable you to make better decisions when configuring your Gunbot trading strategies.
What is ROE?
ROE stands for Return On Equity. It represents the percentage gain or loss on the current assets held in your portfolio, inclusive of trading fees paid. In other words, ROE helps you assess the profitability of your spot position at any given time.
Gunbot includes the cost of trading fees in its ROE calculation. This provides a more accurate measure of profitability.
Here's where things get interesting: Gunbot analyzes the whole order history to calculate the current profit or loss on a position. Even with complex order sequences involving multiple buy and partial sell orders, Gunbot keeps track, ensuring you always have a clear view of your position's profitability.
The Importance of ROE in Trading
Understanding your ROE is not just about knowing whether you're making money or losing it. It's about having precise, real-time information that guides your decision-making process. On futures platforms, such in-depth data is commonplace; for spot exchanges, it's a game-changer.
So how does Gunbot make use of this powerful metric? Through two common settings: GAIN and STOP_LIMIT.
1. GAIN
The GAIN setting lets you set a take-profit target at a designated ROE percentage. When your position reaches this specified ROE, Gunbot automatically triggers a sell order, locking in your gains.
2. STOP_LIMIT
On the flip side, the STOP_LIMIT option sets a stop-loss when a specific negative ROE value is exceeded. This feature allows you to limit potential losses by triggering an automatic sell order when the market moves against you.
The Added Value of ROE in Gunbot
By providing an precise view of your ROE, Gunbot puts you firmly in control of your trading decisions. This ability to quickly know your current ROE, something typically reserved for futures trading platforms, gives you an edge on spot exchanges.
The combination of GAIN and STOP_LIMIT settings in Gunbot offers a tactical approach to maximize profits and minimize losses based on accurate ROE data.
Remember, trading isn't just about making the right moves, but also understanding why they're the right moves. And tools like Gunbot, which provide essential metrics such as ROE, are invaluable aids in this journey.
💎 In a Nutshell:
Gunbot's ROE metric brings futures platform advantages to spot exchanges, allowing you to understand your spot position's profitability accurately. By utilizing settings like
GAINandSTOP_LIMIT, you can turn this information into strategic actions.