Episode 10: 💥 Stop Going All-In and Getting Liquidated! Master Freqtrade's Capital Allocation to Survive Longer

In Freqtrade, capital allocation is the foundation of all strategy operations. Whether in spot or futures trading, parameters like stake_currency, stake_amount, and tradable_balance_ratio determine the currency used per trade, the amount of funds allocated, and how account risk is controlled.

Proper configuration ensures stable and safe strategy execution; poor setup can lead to order failures or liquidation, impacting live trading.

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🪙 stake_currency — The Trading Currency Used

"stake_currency": "USDT"

• Specifies the base currency used for buying in each trade.
• Common options: "USDT", "BTC", "ETH", etc.
• In spot trading, this determines the asset type you need in your account.
• In futures mode, it sets the denomination for contract margin. ✅ Practical Tip:
• Most strategies use "USDT" as stake_currency — it's more universal and stable.
• If you only hold BTC and want to trade other pairs directly with it, switch to "BTC".

💵 stake_amount — Investment Amount Per Trade

Can be set as:

1️⃣ Fixed Value (Recommended for Beginners)

"stake_amount": 100

• Each trade uses up to 100 USDT; actual order size may vary slightly due to price/position adjustments.
• Easier risk control with higher consistency between backtests and live trading.

2️⃣ Dynamic Value "unlimited"

"stake_amount": "unlimited"

• The system automatically uses available account balance (limited by tradable_balance_ratio below).
• More flexible, ideal for larger capital or complex strategy scheduling. ⚠️ Note:
• In futures accounts, ensure proper leverage is set on the exchange — Freqtrade's stake_amount does not auto-manage leverage.
• When using multi-pair or multi-position strategies, pay close attention to position management to avoid depleting the entire balance.

🧮 tradable_balance_ratio — Balance Usage Ratio Limit

"tradable_balance_ratio": 0.95

• Only effective when stake_amount: "unlimited".
• Caps usage at 95% of account balance for opening positions, reserving 5% as a buffer.
• Prevents "running out of funds," avoiding failed subsequent orders.
• 📌 Example:
  • Account balance: 1000 USDT, ratio = 0.95 → strategy uses at most 950 USDT for positions.
• ✅ Recommended Values:
  • Generally 0.90 ~ 0.98;
  • The more conservative, the better protection against liquidation or insufficient margin.

🛡️ Live Trading Risk Control Recommendations

Control Point	Suggested Config	Reason
Initial Testing	"stake_amount": 50~100	Fixed amounts are more stable for observing strategy performance
Batch Trading	Pair with "max_open_trades" limit	Prevents too many simultaneous positions, avoiding fund dispersion and risk runaway
Account Safety	Set tradable_balance_ratio < 1.0	Reserves buffer for fees or emergencies
Leverage Mode	Dynamically control position size or enable liquidation_buffer	Avoids full-margin leverage liquidation and liquidity crashes

✅ Example Configuration Combo

"stake_currency": "USDT",
"stake_amount": "unlimited",
"tradable_balance_ratio": 0.9,

This means:

• Trade using USDT;
• No fixed per-trade amount, but never exceed 90% of total balance;
• Skip trades under 10 USDT;
• Best for intermediate/advanced users with integrated risk controls.

✅ Summary Checklist

Parameter	Description	Recommended Value / Tip
stake_currency	Currency used for trading (buying)	"USDT" most common
stake_amount	Per-trade amount: fixed or "unlimited"	Beginners: fixed; Experts: dynamic
tradable_balance_ratio	Caps max account usage to avoid full balance or margin exhaustion	0.9 ~ 0.98

Treat these settings as your baseline capital safety net before going live. No matter how good the strategy, always defend the "bottom line" of fund control.