DCA Bots Frequently Asked Questions from Users
In our last article, we took a look at the intricacies of DCA bot operation and how diversification can help us optimize our bots. In this article we’re going to go over some of the more frequently asked questions we get on DCA bots!
Should we use a stop loss with DCA bots?
In general, absolutely not. The issue with using a stop loss on DCA strategies is the deals that hit stop loss will almost always get more SO’s than the deals that go right up and close. This means you will almost always lose more than you win. Of course, if you have a strategy built around the stop loss then this is less of an issue — but those are few and far between.
Are DCA bots the PERFECT strategy with no flaws?
NOPE! Nothing works all the time and everything works some of the time when it comes to trading. But when it comes to the long term, DCA is an extremely effective strategy and can easily out-pace conventional trading methods — but in extremely bullish or extremely bearish periods you will get some downtime compared to more active strategies. Often traders will pair automated DCA with manual trading strategies in order to get the “best of both worlds”
I’ve been holding this deal for a while now and I don’t think it will close — what should I do?
When it comes to hanging deals, or “bags” as they are commonly called, we basically have 2 options: Close it or Trade it. Closing means just taking the loss and moving on, trading means adding funds manually with the intent to close it in profit. In our next article, we’ll go into more details on HOW to manually trade a red position and get it back in the green. In general, we always want to trade deals, but doing so requires some skill (or indicators in the place of skill!). Still, DCA is a long-term strategy largely, we do not want to panic close deals if we don’t have to.
My bot was closing deals quick when i started it, now it’s slowed down — what’s up?
This is normal. Markets fluctuate and depending on when you start the bot you could get wildly different performance from one day to another until it finds its groove. If you start in an uptrend for example deals will close fast, then you’ll get some bags when the market reverses. This is totally normal and is the whole point of the SOs we discussed in article 1. As the price declines, the volume builds up on the deal and the price is lowered to a point where the deal closes for more profit and quicker than if we had just waited for the price to rise above the original entry.
Can I make enough off just DCA bots to live off of?
Yes, depending on your starting capital of course. Due to market fluctuations, we generally recommend using a blend of DCA bots along with other strategies. We’ll go into more detail on some ways to set up a structure like this in the future.
Those are some of the more frequently asked questions we get in regard to using DCA bots. In the next article, we’ll dig into some of these topics more in-depth, specifically: Trading a deal from the red into the green, and setting up an overall structure for using DCA bots to their fullest.
Join us again next week for more Trading Tips & register with MIZAR to automate your trading and get back your time.
Make sure to follow BPT’s Social Channels as well!
Twitter: https://twitter.com/blockpartytrade
Website: https://www.blockpartytrading.com
Telegram: https://t.me/BPTbotchat
About Mizar
Help us build the crypto trading platform you want to use.
Mizar is a next-gen trading platform where traders can search for strategies to securely allocate capital or get access to a wide range of trading tools to put their assets in motion. Mizar makes trading simpler and more accessible to everyone, subscription-free.
Be an active part of the MIZAR crypto trading community.
Sign up here or visit mizar.com
Discord | Telegram | Telegram Announcements | Twitter | Website | Medium | Youtube