What is DCA (Dollar Cost Averaging)
How to apply this with your Cryptohopper.
DCA is a technique used to average out your buy position or to marginalise your losses when price decreases.
The assumption in DCA is that the price will increase at a point in time and that increasing your position size will decrease your average buy cost. This will allow your to reach profit faster when price moves up. For this technique you will have to either increase your portfolio size or decrease your initial order size to allow for the doubling of orders (doubling or more as you can specify in the settings)
Config- Baseconfig -Dollar cost Averaging
- Enable to allow DCA trading
- Order type:
Limit = A limit order is the safest order option. When the price reaches your predetermined level the bot will buy. The price is set by your bot when you enable DCA.
Market = A buy through the this option is riskier in comparison to a limit order. When using this option the bot buys at the current market price
DCA After X time Open Select after which time frame the DCA becomes active.
- DCA Max retries Set the amount of times a DCA can be successfully implemented (how many times a DCA buy can be executed)
- DCA Set percentage trigger Select the percentage loss at which the DCA is triggered.
- DCA Buy immediately Select this option if you want to activate the DCA buy order immediately upon reaching the determined loos percentage (previous option at step 5). DCA will buy without the strategy trigger. If this option is not selected DCA will buy when the set strategy triggers a buy condition.
- DCA Order size
Double Double your current holding in the position.
Triple Triple your current holding in the position.
Custom Select a custom percentage. i.e. 200%. This will cause your position to triple (original plus 200% equals 300%) . This is known as triple down.
Your DCA Settings are :
LIMIT-1 HOUR- 2 - 10 - DCA IMMEDIATELY AAN - DOUBLE DOWN.
Your current position in the example is 50 dollar.After 2 hours of trading you are at a loss of -10%. Your DCA is activated and buys and order for 50 dollar. Your total investment goes from 50 dollars to 100 dollar. Your -10% loss (5 dollars) now becomes -5% (5 dollar is 5% of 100 dollar)