Whether you are following a DCA strategy from the marketplace or building your own DCA bot it’s important to have an understanding of the various settings and configurations so that you can select or build a strategy that suits your needs and trading styles.
In this article, we’ll run you through the basics to give you a solid understanding of DCA settings and their impact on your results.
General Settings
First up is your strategy’s name and a quick description. Whilst not related to performance having a name that easily lets you identify and edit the bot is a solid plan, searching each bot's settings to identify the one you need to stop or edit in a pump or dump is not ideal. If you’re looking to identify differences in strategies when testing the description can be used to quickly identify these differences for example two identical strategies could be named “DCA Long bot — Test” with the description containing the pairs the bot is trading.
Strategy Settings
Traders can make money either by selling an asset at a high price and buying back lower (going Short) or by buying low and selling high (going Long).
Side lets you choose which of these trade styles your strategy will employ, Long or Short. Short trading is only available in the futures markets.
Base Order Size
This is the size of the initial buy order your DCA bot will place, it is always expressed in the quote asset, for example, if your bot is buying multiple ALT coins with USDT then the quote currency is USDT and the buy order will be displayed in USDT.
Since DCA positions run on multipliers, the size of your base order will directly affect the overall cost of your eventual position as all subsequent safety orders will be multipliers of this first order.
Exchanges will have minimum orders which are usually around $10 on spot, on futures different assets have different minimum orders so bear this in mind when selecting assets to trade.
Safety Order Size
The size of the safety orders or additional orders that are placed automatically by the bot as the price decreases.
Start Order Type
There are two types of start order: Market and Limit.
Market orders are enacted immediately at the current price, this can sometimes result in slippage where the price moves before your buy are enacted meaning you may end up with a slightly different buy price than intended.
Limit orders are logged in advance onto the exchange so they are enacted without slippage. Mizar uses a custom limit order system that checks your orders periodically, if they are not filled they are adjusted to get the best possible price.
Start Order Conditions (building a bot only)
When creating your own bot you will need to define how to open new positions. There are 3 options:
- Open Position ASAP: open a new position as soon as possible.
- API: open a new position through an API command.
- TradingView (webhook/API): Create a trading signal in Trading View and trigger your bot via webhook.
Using Trading View allows you to use technical indicators and chart analysis to trigger buy orders, so for example a traditionally bullish signal like RSI oversold could be sent via webhook Mizar to open a trade.
Exchanges and Market
Exchange
When creating a DC bot you can select to use the bot on any of your Mizar connected exchange accounts, when selecting a DCA strategy from the Marketplace check to see that the strategy is compatible with the exchange accounts you have connected.
You can select multiple exchanges and when activated select which exchange to run the bot on.
Market
Select whether to run your strategy in the Spot or Futures market.
Pairs
Select the pair or pairs (you can select as many as you like). Pairs are defined by the exchange selected. If you are selecting a strategy from the marketplace make sure you are happy with the pairs selected.
As a general rule, more pairs equals more frequent positions which increase your market exposure and therefore profit in favourable market conditions however it also increases exposure in bearish turns which means more activated safety orders and higher investment levels.
Take Profits
The % at which profit is taken. There are two take profits types:
- % from the initial base order so if you buy at $10 and your take profits are 1% then you will cash out of the position when the price reaches $11.
- % of total volumes. This takes into account the reduced average price that results from DCA safety orders so as your average buy price reduces then your take profit reduces in line with the buy price.
Trailing Deviation
This allows you to stay in positions after your take profit target has been hit. The theory is that if the price is increasing rapidly you can chase prices up beyond your initial TP.
The deviation is the % drop back that would cause the trailing profit to close, so say your TP is at 5% and you have a trailing profit of 1%. Once the price goes above 5% then your trade will only close when the price falls by 1%. So in this example, if the price went to 7% and then dropped back to 6% your trade would close at 6% instead of 5%.
Stop Loss
Generally, a DCA strategy won't rely upon stop losses but they can be set. A stop loss closes a position early to prevent losses. Generally in a DCA strategy, we would use safety orders to reduce the average buy price however stop losses can be used to provide liquidity or limit drawdown.
The stop loss is entered as a % from the av. buy price after all SO’s are triggered. So if your stop loss is set as 10% then it triggers when the price falls 10% closing the position with a 10% loss.
Stop Loss Type
When the stop loss is hit the bot can either
- close the position.
- close the position and stop the bot entirely.
Stop Loss Timeout
The stop loss timeout is set in seconds, when the stop loss is hit for the first time, then after the timeout, it will check again if the stop loss is still hit. If that is the case then the stop loss is activated. This is to prevent hitting the stop loss by accident.
Orders Settings
Safety orders are used to reduce the average buy price of investments which allows you to profit more, and more easily if the price moves against you at any point during the time the investment is open.
Max n. Open Positions
The maximum number of open positions simultaneously. The number of positions multiplied by the cost of those positions will give you your maximum invented amount so when setting Max active positions, buy orders and safety orders keep this in mind!
Max Safety Trades count
The maximum number of safety orders per position.
Max Active Safety Trades Count
The maximum number of open safety orders per position.
Open Orders Price Deviation
The price deviation in percentage for each safety order. For example, if the price deviation is set at 2%, then the safety orders are set every 2% apart from each other. If the base order price is 100 USD, then the first safety order’s price is set at 98 USD, the next one at 96 USD, etc.
Safety Order Volume Scale
The volume scale can be used to increase the order size of each subsequent safety order. For example, if the volume scale is 2, and the first safety order is set at 100 USD, then the safety order sizes are 100 USD, 200 USD, 400 USD, 800 USD, etc. By increasing the order size per safety order, you effectively improve your average price and make it easier to exit with a profit.
Safety Order Step Scale: The step scale can be used to increase the price deviation per safety order. For example, if the step scale is 2, and the initial deviation is 2%, then the next deviations are 6%, 14%, 30%, etc.
Advanced Settings
Position Break Period
The break period is defined in seconds and will build in a delay between the opening of positions. If a position is opened, then the next position can only be opened after the break period.
Position Timeout
The timeout is set in hours and a position will be automatically closed if the timeout has expired. If the timeout is not set, then the position is kept open indefinitely until the take profit order, or optionally, the stop loss is hit.
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