Trading Tips with Mizar & Block Party Trading | How DCA Bots Work
Welcome to Trading Tips, where Mizar will partner up with the best signal callers in crypto to provide you with insight on how to become more profitable and efficient!
For the next few weeks, we’ve partnered with Block Party Trading who are Signal Callers that provide copy trading strategies as part of Mizar’s Platform, to bring you some insights into DCA Bots…
What are DCA Bots and Why are They AWESOME?
We’ve looked at what Dollar Cost Averaging (DCA) is, and why it’s a great tool for traders to use — But what’s a DCA Bot, and what do all these acronyms mean? Well let’s get into that, but first, like anything in trading we need to know what our terminology is to even discuss what’s going on.
Deal: This is used to refer to the collective parts of a single trade, from open to close and everything in between.
BO = Buy Order: This is the initial order the bot uses to enter the position. The start of the journey is you will.
SO = Safety Order: These are orders placed after the initial order in order to DCA our entry price and close the deal quicker and with higher profit. Think of these as the direct replacement of a Stop Loss.
TP = Take Profit: This is the point at which we close the deal. It is generally represented as a % away from the entry price.
MAD = Max Active Deals: How many deals an individual bot can have open at any given time.
So now that we know the grammar, what is a DCA bot?
To put it simply, a DCA bot opens a deal with a BO based on a command which is supplied by one of the strategies on Mizar. After the bot opens the deal it will then wait for the deal to rise to the TP point — at which point it then closes the deal for the set profit! Simple right? But what do we do if the price doesn’t go to our TP and goes the other direction? This is where SO’s come in.
SO’s allow the bot to DCA into the position if things go against us, effectively lowering the distance to the TP and increasing the volume in the deal at the same time. Not only does this mean the deal will close quicker than just waiting for things to correct — but it also means we make more off the same deal. We call that a win/win!
There are two ways to do SO’s:
- The traditional way is based on a martingale principle, where we have a multiplier that we add to each SO to increase both the volume of the SO and the deviation of each SO from the entry point.
- The BlockShift way, exclusive to Mizar, does not use the multiplier on the deviation entry to place the SOs but instead uses a signal sent from the strategy provider. This greatly increases the effectiveness of each individual SO.
Mizar takes care of your SO size according to your BO size, using settings created by the strategy provider when you set up the bot. You just need to add the BO size and MAD numbers on the setup screen, and the required capital to run the bot will be displayed for you.
By implementing DCA, you reduce your risk trading.
By electing to use MIZAR DCA Bots, you increase the efficiency and automate your trading to precisely execute trades on your behalf.
Join us again next week for more Trading Tips & register with MIZAR to automate your trading and get back your time.
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