In a recent release, we rolled out support for a portfolio stop-loss feature. When the performance of your portfolio matched the portfolio stop-loss threshold, Shrimpy would automatically execute the trades to sell your portfolio to USD or another stablecoin.
Although the launch of this feature was wildly successful, we found a common theme from the requests we were receiving. That theme was people wanted to see the portfolio stop-loss feature expanded to social leaders.
Rather than only monitoring the performance of an automation strategy, a stop-follow would monitor the performance of a leader and execute a “stop-follow” if the leader performed poorly.
Similar to a stop-loss, a stop-follow trades the entire portfolio of assets that are currently allocated by the leader to USD. In addition to pulling your portfolio out of the market, the stop-follow will also immediately stop copying trades from the leader. At which point, your portfolio will no longer be following the leader.
We understand this can happen at a moment’s notice, so we have implemented a notification system that will automatically send you emails when a stop-follow is triggered.
How do you set a stop-follow?
This image shows what you will now see when you select to “Follow Leader”. Notice that you will need to select a portfolio, check the box saying you understand that Shrimpy will copy the allocations of the leader, and input a value for the stop-follow. Shrimpy will automatically populate the input box by default.
Unlike a stop-loss which is optional, a stop-follow is required. Every time you select to follow a leader, you will need to select your stop-follow value.
Notice how the conditions for the stop-follow are different than the stop-loss. A stop-loss uses a percentage performance over a time period. The stop-follow is implemented using a flat US Dollar value for the trigger.
Note: If you set your stop-follow value in another currency, such as EUR, JPY, or CAD, the amount will automatically be converted to USD when stored in our database. This conversion is done since we use USD to determine when to trigger the stop-follow.
That means if your portfolio currently has a value of $2,000 and you set a stop-follow for $1,000. Shrimpy will automatically execute the stop-follow as soon as we see your portfolio value drop below $1,000.
Once the stop-follow has been executed, you must manually select a new leader or strategy to begin automating your portfolio again. There is currently no feature in Shrimpy to automatically re-enter the market after a stop-follow has been executed. Your funds will remain in the fiat currency of your choice until you manually select otherwise.
How to update your Stop-Follow
On the “Automation” tab you can update your leader stop-follow at any time. This can be done by selecting the leader you are following then inputting a new value for “Portfolio Value”.
After your stop-follow has been set for the first time, it’s possible to change the stop-follow value at any time. You do not need to stop following the leader and re-follow the leader to set a new stop-follow value.
The stop-follow value can be updated on the “Automation” tab by selecting the leader you follow. On the left side of the screen, you will see a section for “Stop-Follow”. In this section, there are inputs for the “Portfolio Value” and “Currency”. To update these values, simply select the new values you wish to use and click “SAVE” at the bottom right of your screen.
When a stop-follow is triggered, you will receive an email to notify you of the event that took place. The email will look something like the one above.
The cryptocurrency market is volatile. That makes timely notifications an essential feature for promptly notifying users about updates to their portfolios. The leader stop-follow email will immediately be sent once the portfolio value threshold has been crossed for the stop-follow.
Things to Know
Although we believe the implementation we have selected for the stop-follow is the most intuitive approach possible, we still have a few concerns that we would like to make apparent.
With the way we’ve implemented the stop-follow, Shrimpy will trigger the stop-follow as soon as we see your portfolio has gone below the selected threshold. That means if you have $2,000 in a portfolio with a stop-follow set at $1,000, transferring $1,500 out of the portfolio into another portfolio would instantly trigger the stop-follow.
Due to this behavior, we recommend you first update your stop-follow value before transferring funds out of a portfolio.
The stop-follow feature requires more manual effort than the stop-loss. Although we believe setting a specific portfolio value as the threshold for the stop-follow is intuitive, it doesn’t come without unfortunate side effects.
The most obvious problem is the static threshold. That means as the value of your portfolio increases or decreases, your stop-follow does not change. In the case of the stop-loss, Shrimpy evaluates the stop-loss over time and only triggers if your portfolio performance crosses over the threshold in the selected amount of time. Since the stop-loss uses percentages and not a static portfolio value, the stop-loss value does not need to be updated once set.
With the stop-follow, users will need to manually change their threshold as they wish. For example, if you have a portfolio valued at $2,000 and a stop-follow at $1,000, you may want to change your stop-follow to $3,000 if the value of your portfolio rises to $4,000. However, this must be manually changed.
Display Currency to USD
The portfolio value that you input into the stop-follow is in terms of the display currency (Except for BTC, which uses an input of USD). That means if you use Shrimpy with a Euro display currency, the value you input into the stop-follow will also be in terms of Euros.
The confusion comes from the way we store these values. In the Shrimpy servers, we store this value in terms of USD. The reason we store the value in terms of USD is because that’s how we evaluate when to trigger the stop-follow.
As a result, you may notice on your “Automation” tab that the value of your stop-follow will drift over time if you don’t use US Dollars as your display currency. That’s because the value of the US Dollar compared to your display currency has drifted over time. Generally, the drift in value should be small between different fiat currencies, but it may be noticeable.
This behavior is expected, so we recommend you take that into consideration when setting your stop-follow value.