Risk management smart DCA
In this strategy we split our capital in two parts:
Part 1 (1st buy): 1/4th of total capital
Part 2 (2nd buy): 3/4th of total capital + remaining capital of Part 1 after -20% stop loss (80%)
The goal is to make an arbitrary buy at some suitable price level on any price chart and we believe that the price will continue to go up. In this case in order to make profit.
What if it goes down instead? In order to bring as much as possible of the part1 capital to the next buy (part2) when dumping, we need to use a stop loss say -20% so that we bring 80% of first part to part 2.
The second part has also the same goal, to make profit from the buy level. Wait for the real bottom, wait for it has dumped big and stabilized level.
Avoid shorting after stop loss because the dump could be short in both time period and price level and cause a short loss together with long loss. This will be bad consecutive trading.
Part 1 (1st buy): 1/4th of total capital
Part 2 (2nd buy): 3/4th of total capital + remaining capital of Part 1 after -20% stop loss (80%)
The goal is to make an arbitrary buy at some suitable price level on any price chart and we believe that the price will continue to go up. In this case in order to make profit.
What if it goes down instead? In order to bring as much as possible of the part1 capital to the next buy (part2) when dumping, we need to use a stop loss say -20% so that we bring 80% of first part to part 2.
The second part has also the same goal, to make profit from the buy level. Wait for the real bottom, wait for it has dumped big and stabilized level.
Avoid shorting after stop loss because the dump could be short in both time period and price level and cause a short loss together with long loss. This will be bad consecutive trading.
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