Is it possible to make a tools or already have; like the Stop loss limit feature

[Crypto Library]

Recently, I heard the term tail risk for the first time from this topic, but I already knew what tail risk actually means, like "Trail risk is a type of major risk or event that happens very realistically, such as the LUNA and FTX crash."

Now I think the chcnces of  this type of tail risk is the highest when we invest in altcoins. The Luna incident in 2022 was unexpected for all of us. So if something like this happens now or in the near fututre, it will be unexpected for us.

From what I understood in my exploration, what can be done to avoid trail risk is either to invest only in Bitcoin or if you also invest in altcoins, you have to use tools that will suddenly give a large dumping signal or perform activities like Stop loss limit.

But stop loss limit is only available in trading in CEX. In the case of Dex, is it possible to create such tools that will identify a large dumping at a certain distance as a trail risk and at the same time sell it like a stop loss limit?

[Dr.Bitcoin_Strange]

These are unannounced events, you clearly stated that such events are usually unexpected and as such, there's no way one can tell that a particular altcoin project or exchange is about to crash or not, however, if a project is facing some issues, you will discover liquidity being pull out from the coin or token and secondly some exchange will delist the token, when you see such happening, it's left for you to decide whether to keep holding such token or sell it off. I do not think that there's any feature that can be built to accurately determine whether a project will crash or not.

[Hatchy]

There should be something like that. I've used one before, but I can't really remember exactly how it works. A friend of mine who was really good in the Web3 space had some Telegram tools or bots that provided these signals. What you basically do is set the amount you're willing to risk, and the bot follows those kinds of signals, such as pump and dump movements on major rising altcoins or tokens. It automatically triggers the purchase, and you can also set your target. For example, if I want to make 3X, I just enter the commands into the bot and let it run. My only job was to check and monitor it from time to time.

But you will still take losses because you can't always catch the drops immediately, and sometimes the bot enters the trade too late. I tried looking for it on my old Telegram account, but I couldn't find it. I'm not even sure if it's still functional..But I think it's quite similar to what you described.

[Frankolala]

I don't think that I have heard of any tools like this for altcoins on stop loss. Investing in altcoins is very risky and you should do that with only the amount of money that you can afford to lose because you are gambling. However, it will be nice if someone creates this tool but what if the price dumps drastically, can the tools still help, I doubt.

[Oshosondy]

But stop loss limit is only available in trading in CEX. In the case of Dex, is it possible to create such tools that will identify a large dumping at a certain distance as a trail risk and at the same time sell it like a stop loss limit?

Something closer to what you have described are the exchanges that require no KYC like tthe Hyperliquid, Asterdex and Laughter. I have not used any of them before, but I know that you can first try Hyperliquid and see it there.

Another one that you can try are those of the wallets like the Pancakeswap perps. They also have stop loss and take profit.

[tbct_mt2]

But stop loss limit is only available in trading in CEX. In the case of Dex, is it possible to create such tools that will identify a large dumping at a certain distance as a trail risk and at the same time sell it like a stop loss limit?

I don't know it is technically possible.

I am no longer active with trading and with my knowledge, with Decentralized Exchanges, people will have to connect their wallets to exchanges, and make swaps by themselves. It means DEX traders will have to do things manually and directly by themselves so if your idea is deployed, technically users will have to give their wallet access to Decentralized Exchanges.

It is risky if this trading feature exists, and I will not use it.

[Alphakilo]

But stop loss limit is only available in trading in CEX. In the case of Dex, is it possible to create such tools that will identify a large dumping at a certain distance as a trail risk and at the same time sell it like a stop loss limit?

You got to understand that DEXs are different from CEX in the aspect that they lack a central order book, so they need to rely on automated smart contract vaults, off chain bots, that aims to always keep an eye on the prices in the market and instigate on chain swaps.
All this though might require one to rely on a third party as it is and this also isn't a guarantee against market crash in prices, but that's why it's adviced always, to stick to Bitcoin investment and learn to maintain a proper position sizing and use only amounts one can afford to lose Incase the need or urge to invest in altcoins is a key part of ones trading strategy.

[OsaiEmma]

But stop loss limit is only available in trading in CEX. In the case of Dex, is it possible to create such tools that will identify a large dumping at a certain distance as a trail risk and at the same time sell it like a stop loss limit?

There are different ways of achieving this; it all depends on if you want it done automatically or manually. Note: automated setups are usually more riskier, since you often have to connect your account to a 3rd party.

For the manual setup: You can use CExs to monitor the price action of coins. Most CEx apps give notification whenever there is a significant price change on coins; you can configure it to a particular coin of your choice—even some non-custodial wallets do this.

You can also use CEx's order book where you can see in real time the buy and sell pressure—there are Dex order book too like Orderly Network, but CEx's order book is better. But, a mempool observer will give you a good signal on the buy/sell pressure of a coin.

After getting the desired signal/data, you can manually pull the trigger, and sell off (manual stop loss).

For the automated ones: Hatchy has already given the most popular one in his reply above. Although, you bear the risk of trusting a 3rd party service provider with your wallet and funds—I've heard some of them are scams.

[maydna]

I don't know if we have a tools that can identify a large dumping signal that might happens. But if you want to invest in altcoin, buy at low and once the price increase so high, sell it immediately and leave the altcoin to finds others. This strategy works for many coins especially new coins but no guarantee that we can found the right coins among thousands of coins.

DEX can have stop loss limit but that depends on the team whether they want to integrate it to their trading panel or not. We don't know which altcoins will increases so be careful trading altcoins and sell it if you see the profit before the price dump.

[Gozie51]

From what I understood in my exploration, what can be done to avoid trail risk is either to invest only in Bitcoin or if you also invest in altcoins, you have to use tools that will suddenly give a large dumping signal or perform activities like Stop loss limit.

I think the trail risk you are talking about is likely going to be what is called trailing stop in forex trading. It helps you to pick your profit depending on how many minutes interval you set it and the volatility of the market, it also stop you out if the market tries to revert. Unfortunately, I'm not sure this tool will be available in altcoins. To have a bot that will monitor the dumping of coins or when they project is going to be scammed is not realistic like the Luna and FTX case you mentioned. I have not seen this feature yet and it will be nice to have such a technology that will interpret sentiment and to read people's mind when they are about to dump their hodling.

[GreatArkansas]

Stop-loss on CEX helps with normal dumps. DEX auto tools that need wallet connect? Pass for me; too scary.
But this still depends. Since I'm into tech, a programmer, if I built this kind of script or tool and plugged it into some DEXs and could assure it would be safe, I might trust it and use it.

[shinratensei_]

You don't even need to create your own tool for stop loss or take profit limit feature, there are existing tools already.

If you want CEX like UI with TP/SL (Perp Dex) :
- Hyperliquid
- Lighter
- Aster

If you want DEX UI with TP/SL and limit order :
- Kyberswap
- Jupiter

As for identifying tail risk and automatically trigger SL limit, I don't really think that kind of tool exist unless you develop yourself, I don't even think it exist on CEX.

[PERtua]

I believe the key difference is when you see a price move down and when you actually get a sell done. A DEX bot can follow the price level and execute the swap when it reaches a certain level, but if there is no liquidity at the time of the dump. The price executed to the swap may be much lower. This can be exacerbated by slippage and MEV. So such a thing might shorten the time to react. But it's impossible to guard against the fundamental tail risk. Sometimes, a position size limit will be more effective than relying only on an automatic stop.

[crwth]

Isn't that already common on trading platforms? Whether I'm using a DEX or a CEX, I put stop-losses on my trades to prevent losing so much more than I anticipated. It's best to be prepared so I can retain more of my capital.

If what you mean is that there are safety features in place by the exchange itself, I don't think that's right. It's going to be seen as some kind of manipulation because if a person decides to sell everything he has and the buy orders fill up, then that's the buyers and sellers discretion.

This would be valid only if there are valid liquidity on the coin itself. I think this is prone to manipulation with meme coins or something.

[joniboini]

If you want DEX UI with TP/SL and limit order :
- Jupiter

I only checked Jupiter, and from their blog post it seems they just recently launched the trailing stop feature? It was posted on July this year iirc. I guess we'll see more DEXes develop similar tools in the near future. I can't imagine using another platform that offers nothing like that when the market behaves erratically, especially when it's not that hard to use. The alternative is to run your own bot connected with the API of the DEX you choose I guess, especially if you want more complex indicators to decide when and how much you'll sell. CMIIW.

[Oshosondy]

As for identifying tail risk and automatically trigger SL limit, I don't really think that kind of tool exist unless you develop yourself, I don't even think it exist on CEX.

What do you mean as automatically trigger stop loss limit? Stop loss order are set manually, but they are triggered automatically and that makes it automatic.

Another thing is that stop loss can not be a limit order, it has to be a market order. If it is take profit, it is a limit order, but stop loss is a market order compulsorily.

[Wiwo]

tail risk is the highest when we invest in altcoins. The Luna incident in 2022 was unexpected for all of us. So if something like this happens now or in the near fututre, it will be unexpected for us.

First off you need to correct the bolded word, it's Trail risk and not tail risk, that terminology misuse can make the concept unclear for discussion and contributions..

The problem with Dex implementation of automated stop loss features is that is not as reliable as the Stop lose feature that we have automated by CEX, due to how some segments of altcoins market move in an uncertain ways, like when there is a token collapse it movement can become unreliable since it a network collapse rather than just market collapse so stop lose automatically is render unfit for such situations.

[Dreadboost]

Recently, I heard the term tail risk for the first time from this topic, but I already knew what tail risk actually means, like "Trail risk is a type of major risk or event that happens very realistically, such as the LUNA and FTX crash."

Is it tail risk or trail risk?
Seen its tail risk according to google

Now I think the chcnces of  this type of tail risk is the highest when we invest in altcoins. The Luna incident in 2022 was unexpected for all of us. So if something like this happens now or in the near fututre, it will be unexpected for us.

From what I understood in my exploration, what can be done to avoid trail risk is either to invest only in Bitcoin or if you also invest in altcoins, you have to use tools that will suddenly give a large dumping signal or perform activities like Stop loss limit.

But stop loss limit is only available in trading in CEX. In the case of Dex, is it possible to create such tools that will identify a large dumping at a certain distance as a trail risk and at the same time sell it like a stop loss limit?

Many parameters have to be taken when developing such tools.

The developer will consider the mean price after a certain period of time (for tail risk, it's usually 3 periods and above or below), the standard deviation, and then use the standard deviation to calculate it for 3 periods. Left tail or 3 years right tail to determine. Also, the tool has to have a field where folks will set the period to daily, weekly, monthly, or yearly. Such tools will come in handy.

[Charles-Tim]

The problem with Dex implementation of automated stop loss features is that is not as reliable as the Stop lose feature that we have automated by CEX, due to how some segments of altcoins market move in an uncertain ways, like when there is a token collapse it movement can become unreliable since it a network collapse rather than just market collapse so stop lose automatically is render unfit for such situations.

I remember when bitcoin fell from $120000 to $110000 $100000 suddenly last year, people complained that their accounts on the centralized exchange got liquidated despite that they set stop loss. I think there was a discussion about it on this forum at the time.

Anyone that want something similar to DEX with good stop loss, Hyperliquid is very good.

In extreme volatile market, stop loss can fail on both centralized and decentralized exchanges.

[Wiwo]

I remember when bitcoin fell from $120000 to $110000 suddenly last year, people complained that their accounts on the centralized exchange got liquidated despite that they set stop loss. I think there was a discussion about it on this forum at the time.

Anyone that want something similar to DEX with good stop loss, Hyperliquid is very good.

In extreme volatile market, stop loss can fail on both centralized and decentralized exchanges.

Another good example of automated stop lose failure incident is when the Luna crash happened.

Alot of trader's get liquidated despite setting a stop lose price their still get liquidated.

You are right that stop lose can fail on both sides, regardless if it DEX of CEX exchange.