📘 「Revealed」Full Lifecycle of a Freqtrade Strategy – Build a Stable and Profitable Crypto Trading Bot!

Freqtrade is an open-source cryptocurrency trading bot supporting automated strategy execution, backtesting, and live trading. Understanding the complete lifecycle of a strategy is essential for developing stable and efficient trading systems.

This guide breaks down the Freqtrade strategy workflow step by step, helping you master core logic and key checkpoints.

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Strategy Lifecycle Overview

Freqtrade’s strategy execution follows an orderly loop, primarily involving K-line triggers, indicator calculation, signal generation, order execution and monitoring, position management, and exit handling.

The pseudocode below summarizes the core logic:

while strategy_running:
    if new_candle:
        calculate_indicators()
        generate_buy_signals()
        generate_sell_signals()
        if buy_conditions_met:
            calculate_position_size()
            confirm_and_place_order()
            check_buy_order_status()
            if buy_order_failed:
                retry_or_cancel()
            else:
                update_position()
        if position_open:
            manage_position()
            update_stoploss()
            check_exit_conditions()
            if exit_conditions_met:
                confirm_and_execute_exit()
                check_sell_order_status()
                if sell_order_failed:
                    retry_or_cancel()
    else:
        wait_for_next_candle

Visualized as a flowchart:

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Identifier Legend

Identifier	Meaning	Explanation
K	Buy Order Status Check	Check if buy order filled or failed
T	Sell Order Status Check	Check if sell order filled or failed
M	Buy Order Fail Handling	Handle missed or timed-out buy orders
V	Sell Order Fail Handling	Handle missed or timed-out sell orders
L	Buy Order Filled Callback	Triggered after buy order filled
U	Sell Order Filled Callback	Triggered after sell order filled

Note: These identifiers simplify the flowchart. In actual code, use the corresponding strategy functions such as order_filled().

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Key Checkpoints

1. Strategy Initialization (bot_start)

• Initializes strategy parameters, environment, and data structures.
• Provides a solid foundation for the main trading loop.

2. Main Loop Start (bot_loop_start)

• Triggered at the start of each K-line period.
• Checks for new candle data to ensure decisions are based on the latest market info.

3. Indicator Calculation (populate_indicators)

• Computes all custom or built-in technical indicators (MA, RSI, MACD, etc.).
• Indicators feed into signal generation and decision logic.

4. Signal Generation (populate_entry_trend / populate_exit_trend)

• Determines if buy or sell conditions are met.
• Buy signals trigger the entry flow; sell signals guide exit decisions for open positions.

5. Buy Flow

• Dynamic Position Calculation (custom_stake_amount): Determines trade size based on balance, risk preference, and strategy rules.

• Order Confirmation (confirm_trade_entry): Validates final price and quantity.

• Place Order (configurable via order_types): Sends buy order to the exchange.

• Order Status Check (Node K):

  • Success → Update position, trigger order_filled()
  • Failed/Timeout → Check timeout via check_entry_timeout, cancel or retry

6. Position Monitoring

• Continuously monitor market and position.
• Adjust position (adjust_trade_position) and update stoploss (custom_stoploss).
• Check if exit conditions are met (custom_exit).

7. Exit Flow

• Confirm Exit (confirm_trade_exit): Validate exit parameters.

• Execute Exit (via order_types): Submit sell order.

• Order Status Check (Node T):

  • Success → Update position and return to main loop
  • Failed/Timeout → check_exit_timeout, retry or cancel

8. Loop & Termination

• Every new K-line triggers the above loop.
• On termination signal, clean resources and exit safely.

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Summary

The Freqtrade strategy lifecycle includes:

• Strategy initialization
• Market-driven indicator and signal generation
• Order execution and status management (with retry mechanism)
• Dynamic position management and stoploss updates
• Exit and loop continuation
• Safe termination

Mastering this lifecycle ensures that automated strategies operate stably and flexibly, capable of handling complex market conditions efficiently.