DCA Bots

Available to Premium and Professional users

DCA or commonly referred to as Dollar Cost Average, is a popular accumulation strategy which often spans a long period of time. For experienced traders, the market is known to take on a random "walk". It is absolutely hard to time the market. Hence, it is also near impossible to buy an asset at its lowest price within the window of opportunity.

One of the well proven method for accumulating an asset is the DCA strategy. Essentially, it aims to buy an asset periodically as the price gets lower. The entry condition for DCA varies. The most common method is a Regular Savings Plan (RSP) model, popular within the traditional securities market. RSP is simply buying an asset at every fixed time interval such as the first day of the month.

Configuring the DCA Bot

You may allocate a fixed amount of fund to your DCA bot like how you would do it for the Simple and Advanced bots. Alternatively, you may also set a No Limit allocation. The DCA bot will keep using your capital until the capital in your brokerage account is insufficient to meet the current order. Upon encountering such a situation, the DCA bot will stop.

You must also set the amount of capital for each order which the DCA bot will use to buy the Asset.

CFDHero offers the following entry conditions for DCA bots

  • Fixed Time Interval

  • Technical Indicators (like Simple and Advanced Bots)

  • Buy Down

  • Sell Up

Fixed Time Interval

This mode simply configures the bot to buy at every fixed time interval. You may configure the bot to run every day, once a week or on a particular day in a month.

Technical Indicators

This is similar to your Advanced bots' technical indicators (such as granular settings and 2 hour trading interval). In addition, you can also include the Martingale strategy. Please see below for an explanation regarding Martingale.

Buy Down / Sell Up

This method allows traders to accumulate or dispose of assets as the prices trend down or up respectively. Users can employ the Martingale strategy in this method as well.

The Martingale Strategy

The Martingale strategy is essentially increasing the size of each successive trade. The multiple may not be 2X but can be any percentage you set. The premise for this strategy is that all trends will eventually turn around - a bad market cannot stay stay bad forever. And when the turnaround occurs, the last few trades (which would be the largest in size) will allow a trader to generate a profit much faster.

In CFDHero's Martingale strategy, a trader can set XX% from last trade. For example, if XX = 10%, and if the bot makes 1000 USD worth of purchase in the last trade, the next trade will be 1,100 USD worth of purchase. If XX = 100%, the next trade would be 2,000 USD worth of asset in size. The third trade would be 4,000 USD in size.

If Martingale strategy is set, it will override the Per Order Amount value in the Trade Parameters tab.

Please note that the Martingale strategy can quickly deplete your capital!

Last updated