📘Smart Position Control Tools! Freqtrade’s Two Key Functions to Say Goodbye to Rigid Buying

This article was produced by the Quantitative Trading Lab at https://www.itrade.icu. Visit for more benefits. In quantitative trading, position management is a key factor in controlling risk and improving returns. Freqtrade provides two powerful and flexible functions to help us intelligently adjust positions:

• custom_stake_amount: Dynamically calculate the position size for each trade.

• adjust_trade_position: Automatically increase or decrease positions based on market and current holdings.

This article will explain the functionality and use cases of these two functions, with complete code examples to help you master the core techniques of intelligent position control.

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🔍 1. custom_stake_amount: Dynamically Calculate Buy Position

Function Overview

custom_stake_amount allows the strategy to dynamically calculate the amount or coin quantity for the current buy, replacing the fixed stake_amount in the configuration file. You can flexibly adjust the buy size based on market trend, account balance, volatility, and other factors.

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Typical Use Cases

Scenario	Description
Strong market trend	Increase investment, enlarge position
Market volatility or unclear trend	Reduce investment, open positions cautiously
Changes in account balance	Dynamically adjust position according to current balance

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Function Signature Example

def custom_stake_amount(self, pair: str, current_time: datetime, current_rate: float,
                        proposed_stake: float, min_stake: float, max_stake: float, **kwargs) -> float:
    """
    Return the actual amount to invest in this buy.
    """

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📘 Example: Dynamically Adjust Stake Based on Account Balance

    def custom_stake_amount(self, pair, current_time, current_rate, proposed_stake, min_stake, max_stake, **kwargs) -> float:
        """
        Dynamically control position size:
        - If account balance > 1000 USDT, invest 20%
        - If account balance < 100 USDT, only allow a small test trade
        - Otherwise, use the system suggested value
        """

        # Get account balance
        balance = self.wallets.get_total(self.config['stake_currency'])

        if balance > 1000:
            stake = min(balance * 0.2, max_stake)  # Max 20% of balance
        elif balance < 100:
            stake = min_stake  # Only minimum allowed
        else:
            stake = proposed_stake  # Use default suggested stake

        print(f"[custom_stake_amount] Current balance: {balance:.2f}, Set stake: {stake:.2f}")
        return stake

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🔍 2. adjust_trade_position: Intelligent Position Adjustment During Holdings

Function Overview

adjust_trade_position handles position adjustments while holding, including:

• Automatically adding to positions based on market changes

• Identifying risk signals to reduce positions promptly

• Implementing partial take-profit or stop-loss

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Typical Use Cases

Scenario	Adjustment Action	Description
Profit exceeds threshold	Add position	Capture trend and increase returns
Loss exceeds warning threshold	Reduce position	Control risk and prevent further loss
Sudden market reversal	Partial exit	Protect profit and reduce drawdown

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Function Signature Example

def adjust_trade_position(self, trade: Trade, current_time: datetime, current_rate: float, **kwargs) -> float:
    """
    Return the adjustment amount (positive to add, negative to reduce, 0 to keep unchanged)
    """

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Example: Adjust Position Based on Profit/Loss Ratio

def adjust_trade_position(self, trade, current_time, current_rate, **kwargs) -> float:
    profit_ratio = (current_rate - trade.open_rate) / trade.open_rate

    if profit_ratio > 0.05:
        # Profit > 5%, add 10%
        add_amount = trade.amount * 0.1
        self.log(f"[adjust_trade_position] {trade.pair} Profit >5%, adding {add_amount} units")
        return add_amount

    if profit_ratio < -0.03:
        # Loss > 3%, reduce 20%
        reduce_amount = -trade.amount * 0.2
        self.log(f"[adjust_trade_position] {trade.pair} Loss >3%, reducing {abs(reduce_amount)} units")
        return reduce_amount

    return 0.0

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📈 3. Intelligent Position Control Flow Diagram

flowchart TD
    A[Strategy generates buy signal]
    B{Call custom_stake_amount}
    C[Calculate dynamic buy position]
    D[Place buy order]
    E[Position held]
    F{Market changes?}
    G[Call adjust_trade_position]
    H{Add / Reduce / Keep unchanged}
    I[Execute position adjustment]
    J[Position management loop]

    A --> B --> C --> D --> E
    E --> F
    F -->|Yes| G --> H
    H -->|Add/Reduce| I --> J
    H -->|Keep| J
    J --> F

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🔔 4. Recommendations and Notes

• Boundary limits: Always limit minimum/maximum buy amount to prevent extreme orders.

• Risk control: Combine with overall position allocation to avoid overexposure and liquidation risk.

• Logging: Record each position adjustment for easier backtesting and tuning.

• Test coverage: Backtest across multiple scenarios to ensure robust logic and prevent overfitting.

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5. Summary

custom_stake_amount and adjust_trade_position are the two key tools in Freqtrade for intelligent position management.

• custom_stake_amount dynamically decides the investment amount for opening a position.

• adjust_trade_position allows position adjustments during holding.

Using them properly makes your strategy more flexible, aligned with real market conditions, and able to improve profits while controlling risk.