Kill Switch Discussion

Author: cgambit 0xdEa

Original Post Date: 10 Jan 2022

With recent bearish market conditions, kill switch function has been triggered quite frequently.

However, we are wondering why kill switch does not have a market sell functionality before stopping the bots.

We are of opinion that kill switch with negative value might better function like a stop loss, such that all inventory will be sold off at market price when triggered.

We understand the point that as market makers, we do not want to be the one driving the price down due to activating of kill switches/stop-losses. This totally make sense, & acceptable notion.

Another view is that market selling may result to more losses as price drops down drastically. We may be able to prevent this case when we can use the price_floor parameters that will prevent market selling at pre-determined percentage. At least, in this case, users may still have some degree of control in limiting losses.

Aside from these perspectives, we would welcome and appreciate other insights that we may be missing here.

In summary, our desired outcome is to minimize further losses by selling existing inventory as soon as kill switch is triggered.

Author: Jelle {Cryptobot} 0xe8f

Sounds like a nice feature, I think we can create a setting that allows users to select the preferred behaviour of the Kill-Switch right? Either sell when hit or just stop the bot.

Author: jamesPmagic 0x4eF

This would be a very useful feature indeed. It may be a good idea to name this feature differently, so that we can retain the previous kill switch functionality without any confusion. Perhaps “Kill&Sell”, or “Stoploss”, etc.

Author: Lefty 0x9F8

Such feature would be quite hard to implement in a good way, because selling all the inventory at once would be probably quite losy because of big market impact. Also some users might prefer reaching 50-50% (or otherwise defined) inventory balance instead of selling everything.

Author: cgambit 0xdEa

Thanks for feedback. It is true that we will surely loss when market selling at downtrend, & risky to let bot sell everything, especially if we have relatively large order amount.

Indeed, adding an option/feature to market sell a pre-determined percentage of inventory balance may be better at minimizing losses.