DCA (or Dollar Cost Averaging) is a technique that’s used either to average your buying price or as the “Martingale technique”, which you use when a position is in a deep loss. The assumption of DCA is that a crypto price will rise eventually, so if you keep doubling your investment, your average buy price will be lower, and you will make a profit sooner when the price rises again. You do need deep pockets for this technique, as you will need to keep doubling down on your investment.
Beginners can also use DCA to invest over a longer period gradually. E.g., you invest $1,000 in every 30 days for five months. If prices at the end of each month were $100, $90, $80, $70, and $95, your average asset price would be $85.5. If you invested the full amount initially, you would’ve paid $100 per coin.
Manual DCA orders can be created by using either the bulk actions from the dashboard or by clicking the “view” button on a position, and then clicking “DCA”. This also gives information about any DCA settings/history a position has.
The most important thing you want to configure when setting up DCA is when it should create a new order and how much/how often it should buy. To configure your DCA, go to your Config -> Baseconfig -> DCA.
There are a number of helpful settings for DCA:
DCA after X time open Do you want to buy automatically after a specific time? Select the timeframe to create positions for DCA orders. This comes in handy if you're going to buy a certain asset over a longer time gradually, as described in the example for beginners.
DCA max retries When you use DCA to cover up for losses, you can set how often you are going to let it try execute DCA orders. The count is reset after every successful sale of a position where you've used DCA.
DCA set percentage This is the most basic configuration if you're going to use DCA for positions in a loss. Configure the percentage after which you want the DCA feature to place a new order. When the average price falls this percentage, your Hopper will place a DCA order for the position that's in a loss. Enter a positive number, for example 4.5 (%).
DCA buy immediately Select this setting if you want to trigger the buy immediately when the configured percentage loss hits, or just let the DCA feature buy when your strategy signals a buy for the coin. Watch out! When this is enabled, the Hopper will buy without using any strategy and could buy at an unfavorable time.
Examples of DCA and a more detailed explanation can be found here.
Are you experiencing any problems with DCA? Here’s a checklist that can help you find the most common mistakes.
- Go to the Config -> Base config -> Coins & Amounts. Is the Maximum (BTC/USDT/Etc.)amount allocated enough to double or triple up?
- Is the hopper enabled? Is buying enabled?
- Has the configured time passed? If so, is the percentage (%) loss hit?
- Do you have a config pool enabled? Maybe you have different settings in your config pool.
- Do you have triggers that disable buying?
- If not buying immediately, was there a signal from your strategy for the currency?
- Normally when you have multiple positions for the same coin, the DCA will merge them all and continue using the default settings of your base config. If you only have one open position for a specific coin, then it will continue to use the settings of the signaler.
The DCA tool can give certain messages in your output, such as:
- Checking DCA for coin - checks if DCA is allowed to happen.
- Enabling DCA for coin - allows for DCA trades to happen.
- Checking with percentage - Checks if the percentage difference has been met.
- Percentage trigger not met - The percentage drop indicated has not been met, so DCA won't activate.
- Percentage difference is X - checks the current price percentage and sees if this will allow for a DCA trade.