💹 Don’t Just Trade on Signals! Use confirm_trade_entry to Avoid Losing Buys

In quantitative strategies, generating buy or sell signals is only the first step. Actual trade execution requires multiple checks. Freqtrade provides two key functions:

• confirm_trade_entry
• confirm_trade_exit

They act as a “final confirmation” after a strategy signals a trade, deciding whether the trade should actually be executed. Think of them as a safety valve, preventing losses caused by signal misjudgment, abnormal market conditions, or position risks.

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📈 1. confirm_trade_entry: The Ultimate Filter for Buy Signals

Function

confirm_trade_entry is called after a buy signal is generated but before the actual order is placed. It receives information about the current trading environment and returns whether the trade is confirmed.

Main use cases:

• Risk control: e.g., prevent buying at too high a price or exceeding max positions
• Signal re-validation: confirm buy logic with stricter conditions
• Dynamic strategy adjustment: refuse buying based on capital status or market conditions

Parameters

def confirm_trade_entry(self, pair: str, trade: Trade, order_type: str, amount: float, price: float,
                        current_time: datetime, **kwargs) -> bool:
    """
    pair: trading pair, e.g., BTC/USDT
    trade: current trade object, includes open price, status, etc.
    order_type: limit or market
    amount: proposed buy quantity
    price: proposed buy price
    current_time: current timestamp
    kwargs: other optional parameters
    Returns: True to allow buy, False to reject
    """

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📉 2. confirm_trade_exit: The Final Gate for Sell Signals

Function

confirm_trade_exit is called after a sell signal is generated but before the order is executed.

Typical uses:

• Avoid blind stop-loss: e.g., only allow selling when profitable
• Filter abnormal market moves: e.g., pause selling during flash drops
• Capital management: e.g., restrict sell time windows to avoid frequent trading

Parameters

def confirm_trade_exit(self, pair: str, trade: Trade, order_type: str, amount: float, price: float,
                       current_time: datetime, **kwargs) -> bool:
    """
    Same parameters as confirm_trade_entry
    Returns: True to allow sell, False to reject
    """

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📊 3. Code Examples: From Theory to Practice

3.1 Limit Buy: Prevent Buying at High Prices

def confirm_trade_entry(self, pair, trade, order_type, amount, price, current_time, **kwargs) -> bool:
    # ma20 = self.dp.get_indicator(pair, 'sma', timeframe='1h', length=20).iloc[-1]
    if price > ma20 * 1.5:
        self.log(f"Reject buy {pair}, price {price} exceeds 1.5x MA20 {ma20 * 1.5}")
        return False
    return True

Explanation: Restricts buy price to no more than 1.5× the 20-hour SMA to avoid chasing highs.

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3.2 Sell Only When Profitable: Prevent Loss Locking

def confirm_trade_exit(self, pair, trade, order_type, amount, price, current_time, **kwargs) -> bool:
    if price <= trade.open_rate:
        self.log(f"Reject sell {pair}, price {price} is not higher than open rate {trade.open_rate}")
        return False
    return True

Explanation: Only allows selling when the current price is higher than the open price, avoiding losses.

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3.3 Limit Maximum Open Trades: Control Risk Exposure

def confirm_trade_entry(self, pair, trade, order_type, amount, price, current_time, **kwargs) -> bool:
    open_trades = len(self.wallets.get_trades_open())
    max_positions = 3
    if open_trades >= max_positions:
        self.log(f"Reject buy {pair}, open trades {open_trades} exceed max allowed {max_positions}")
        return False
    return True

Explanation: Limits the number of simultaneous positions to 3 to avoid over-diversification or liquidation risk.

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⚙️ 4. Recommendations and Notes

• Use multidimensional data: Combine volatility, volume, and capital usage for comprehensive decision-making.
• Detailed logging: Record every rejected trade for debugging and optimization.
• High efficiency: Functions are called frequently; ensure low-latency execution to prevent strategy delays.
• Cautious with False: Over-rejecting trades may hurt strategy performance; allow some flexibility.

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🚀 5. Summary

confirm_trade_entry and confirm_trade_exit are indispensable safety guards in Freqtrade strategies.

They allow your strategy to double-check signals before executing trades, filtering out inappropriate buy or sell actions, and significantly improving safety and stability.

Applied wisely, these functions make your strategy more resilient in real trading, supporting long-term profitability.

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Try these functions now and tighten the safety net of your strategy!