All trading on 3Commas is reliant on order book prices which are used to fill Smart Trade orders to buy and sell cryptocurrency assets. There are 3 options to choose when configuring a Limit Order, BID (highest price someone will buy), ASK (lowest price someone will sell) and LAST (value of the last order book transaction, also used as the live price on charts). Three main methods are available to choose from. If you carefully read the descriptions of the BID and ASK methods in this section, especially the examples, you might think that you should select BID for Take Profit and ASK for Stop Loss. This is generally true, but not always.
For this example, you create an order, bought a coin and enabled Stop Loss using the ASK order book price.
The price doesn’t go your way and slowly approaches your Stop Loss and then price falls a lot (also known as a “dump”) due to a large sale (or several sales), typically this is due to someone selling a large amount of coins immediately using a Market Order which executes (and clears) several levels of the BID side of the order book.
Here, the ASK price is still higher than Stop Loss, while the BID price is much lower. After this, the price recovers and rises. In this case you’re glad you selected to follow the ASK price and the market did not throw you out before the rise, leaving you with a large loss.
Imagine that after this happens you start setting Stop Loss to -10% using the ASK price for all of the new trades you create. One day you are in a trade again and the same kind of large sale happens, except this time, the coin price does not recover as it did in the example above, but falls even more!
After the first large sell, the BID price dips below your Stop Loss and reaches -12%, and the ASK price hovers at -8%. Your trade remains open. A second large sell occurs, and this time the ASK price drops to -13%, while the BID price drops to -19%. Stop Loss activates and your trade is closed. What is the result? You have a loss of -19% instead of -12% you would have had if you had chosen to follow the BID price.
As you see, this is a double-edged sword. There is no ideal option; you need to choose according to personal preferences and risk levels. Either you risk being thrown out of the market prematurely, or you risk a greater loss.
This problem is made worse when order books are “thin”, this is where there aren’t many buyers or sellers trading a coin and 24 hour volume level is low.
At present, we recommend you choose BID for Take Profit. The explanation is simple: if someone makes a huge purchase and the price on the ASK side of the order book increases by +20%, your order to take profit and close the trade may be dramatically increased and will close your trade according to the new BID order book prices, as Limit Orders fill at the price you set or better!