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DCA

How to dollar cost averge with precisionI've seen several dollar cost averaging calculator online, however there is something I usually see missing. How many stocks should you buy if you want your average cost to be a specific value. Usually the calculators will ask how much you bought at each level ang give you the average, but not the other way around (telling you how much to buy to make your average a specific value). For this, I decided to make the calculations on my own. Here, you can see the mathematical demonstration: www.mathcha.io
NASDAQ:TSLAEducation
by DarkMessiah777
DCA - is for those who do not like to be nervousIn the fast-paced and often volatile world of cryptocurrency, finding best investment strategy can be a daunting task. While many traders seek quick gains through active trading, a more prudent and less stressful approach exists: Dollar-Cost Averaging (DCA). What is DCA? DCA is an investment strategy that involves investing a fixed amount of money into a particular asset at regular intervals, regardless of the asset's price. This approach aims to reduce the impact of market volatility on investment returns by averaging out the purchase price over time. Why is DCA the Sleep-Well Strategy? DCA offers several advantages that make it an ideal strategy for investors seeking long-term growth and peace of mind: Emotional Discipline: DCA eliminates the emotional decision-making that often plagues traders. By investing consistently, regardless of price fluctuations, you avoid the urge to buy high and sell low. Reduced Risk: DCA averages out the purchase price, reducing the overall impact of market volatility. You may buy some coins at higher prices, but you'll also benefit from lower prices, evening out your investment cost. Long-Term Focus: DCA encourages a long-term investment mindset, discouraging impulsive decisions based on short-term price movements. It's about building wealth gradually and consistently over time. DCA vs. Trading: DCA stands in stark contrast to active trading, which involves buying and selling assets frequently to capitalize on short-term price movements. While active trading may appeal to experienced traders with high-risk tolerance, it often leads to emotional decision-making and can be time-consuming and stressful. DCA: A Proven Strategy with Remarkable Returns To illustrate the effectiveness of DCA, let's examine the returns of some prominent cryptocurrencies over the past few years, assuming a monthly DCA investment of $100: Bitcoin (BTC): Investing $100 monthly in BTC since January 2019 would have yielded a staggering 112% return, with a total investment of $12,000 growing to $25,440. Ethereum (ETH): A DCA approach for ETH since January 2019 would have resulted in an impressive 770% return. Solana (SOL): DCA into SOL since January 2021 would have generated a remarkable 304% return Fetch.ai (FET): Investing $100 monthly in FET since January 2019 would have yielded an exceptional 776% return Understanding the Coins: Technology and Applications Bitcoin (BTC): The world's first and most popular cryptocurrency, Bitcoin is a decentralized digital currency that enables peer-to-peer transactions without intermediaries. Ethereum (ETH): A decentralized blockchain platform, Ethereum supports a wide range of applications, including smart contracts, decentralized finance (DeFi), and non-fungible tokens (NFTs). Solana (SOL): A high-performance blockchain known for its scalability and speed, Solana aims to provide a faster and more efficient alternative to Ethereum. Fetch.ai (FET): An AI-powered decentralized platform, Fetch.ai facilitates the development of autonomous agents for various applications, including open marketplaces and data monetization. Conclusion: DCA is a powerful investment strategy that allows individuals to build wealth in cryptocurrency while minimizing risk and emotional stress. By consistently investing fixed amounts, regardless of market fluctuations, DCA investors can reap significant rewards over the long term. Embrace DCA, sleep well, and let your investments grow steadily towards a brighter financial future.
Education
by Yaroslav_Krasko
The Struggle of Consistency: Navigating DCA in Crypto InvestingHello dear @TradingView community! Today let’s focus on what is Dollar Cost Averaging ? Determining the optimal moment to buy cryptocurrency is often a challenging task due to the high volatility of crypto assets. Prices can fluctuate unpredictably at any given time, leading traders to experience the fear of missing out (FOMO). This fear is commonly felt when the price of a cryptocurrency, such as Bitcoin (BTC), suddenly surges or plunges. During price drops, individuals tend to panic and sell their holdings in a frantic attempt to avoid further losses. Conversely, when prices rise, panic ensues as people worry they don't possess enough coins to sell. As evident, making decisions to buy or sell cryptocurrencies is no easy feat. However, if you seek long-term financial gains from cryptocurrencies without succumbing to the anxiety caused by every price spike, it would be wise to consider the Dollar Cost Averaging (DCA) strategy. Let's delve deeper into what DCA entails and how it functions in the realm of cryptocurrencies. What is Dollar Cost Averaging? Dollar cost averaging is an investment strategy where fixed amounts are regularly invested at consistent intervals, in contrast to a one-time lump sum investment. This approach involves executing transactions regardless of the asset's current price or market fluctuations. It is highly favored by investors and management funds seeking long-term profits from various assets like ETFs, commodities, cryptocurrencies, stocks, and more. How does DCA work? To employ the DCA strategy, you first determine the amount of cryptocurrency you wish to invest. In conventional investing, one would typically invest the entire designated sum in a specific asset. However, with DCA, you invest fixed amounts of USD into Bitcoin or any other asset over a designated period. For instance, you may choose to purchase $100 worth of BTC every month for a 10 year period. When utilizing DCA, the selection of the cryptocurrency becomes crucial. With around 22,904 cryptocurrencies available today, you must pick a coin you believe will appreciate in value and yield profitable returns. You can even choose an ETF which follows the trend (up or down) for any specific asset or basket of assets. To comprehend how DCA operates, consider the following example: Let's assume it is June of 2014, and Katie decides to allocate $10,000 in BTC. In June of 2014, the price of Bitcoin stood at approximately $560 per coin. Instead of investing the entire sum at once, Katie opts for dollar cost averaging throughout the 9 years. From June 2014 to May 2022, Katie spent $100 each month on BTC, disregarding market price fluctuations. After 8 years, she spends almost $9,600 and her earnings reflect the following: The green line in the chart represents Katie’s total investment amount, while the orange line depicts the fluctuation of portfolio size value over the 9-year period. When Katie initiated his investments, both the cost of BTC and his investments were approximately $100. However, as time progressed, the price of Bitcoin underwent changes. By May of 2022, Katie's $9,600 investment had grown to $287,518 worth of BTC, showcasing a growth rate of 2,895%. With maximum gain of $631,540 at bitcoin ATH. Online DCA tools are also available to estimate the earnings from purchasing bitcoins over several months. For example, platforms like dcaBTC enable users to customize their DCA strategy according to their preferences, specifying the amount to purchase, investment frequency, and duration. To successfully implement dollar-cost averaging (DCA) in Bitcoin investing, several key steps need to be followed. These steps involve setting a budget, choosing a reputable cryptocurrency exchange, establishing recurring purchases or utilizing recurring purchases and automated investment platforms (such as Binance, Coinbase, Kraken, Crypto.com or even at Vestinda), and monitoring and adjusting the strategy as necessary. Pros and Cons of Dollar Cost Averaging Let's commence with the pros of dollar cost averaging. By making regular and consistent purchases over time, you mitigate the risk associated with poorly timed lump sum investments. Additionally, since you make regular purchases, you alleviate the fear of missing out and impulsive decision-making prompted by price fluctuations. Cryptocurrency exchanges and platforms charge transaction fees for every trade. While one might assume that DCA would result in higher commission fees, it is essential to remember that this is a long-term strategy. The commission costs are negligible compared to the potential profits that can be realized over several years. Moreover, DCA does not necessitate substantial investments. This strategy involves smaller and consistent purchases, eliminating the need to determine how best to deploy a large sum in one go. Furthermore, if prices suddenly drop at the time of purchase, you can acquire the cryptocurrency at a lower price. However, it is important to note that if the cryptocurrency's price is bullish, you may end up buying at a higher price. This is particularly relevant when dealing with BTC or any chosen cryptocurrency. Many crypto enthusiasts and investors prefer to purchase a significant amount at once, fearing a subsequent price surge in the hours, days, weeks, or months to come. As previously mentioned, with the DCA strategy, you purchase small amounts at regular intervals, regardless of market stability. Should you utilize the DCA Strategy? DCA facilitates maximizing profits with relatively low risk. Although this approach is not devoid of drawbacks, it offers numerous advantages that can be leveraged to your benefit. Hence, is DCA worth your time and money? As always, we recommend thoroughly studying all available information before making any decisions. Save this article to your browser bookmarks for easy reference in the future. Happy trading!
Editors' picks
Education
by Vestinda
11
3rd Pine Script Lesson: Open a command & send it to a Mizar BotWelcome back to our TradingView tutorial series! We have reached lesson number 3 where we will be learning how to open a command on TradingView and send it to a Mizar Bot. If you're new here and missed the first two lessons, we highly recommend starting there as they provide a solid foundation for understanding the concepts we'll be covering today. In the first lesson, you will be learning how to create a Bollinger Band indicator using Pine Script: In the second lesson, you will be guided through every step of coding the entry logic for your own Bollinger Band indicator using Pine Script: In this brief tutorial, we'll walk you through the process of utilizing your custom indicator, Mikilap, to determine the ideal timing for sending a standard JSON command to a Mizar DCA bot. By the end of this lesson, you'll have the ability to fine-tune your trading strategies directly on Mizar using indicators from TradingView. So, sit back, grab a cup of coffee (or tea), and let's get started! To establish a common starting point for everyone, please use the following code as a starting point. It incorporates the homework assignment from our Pine Script lesson number 2. By using this code as our foundation, we can collectively build upon it and delve into additional concepts together. So, sit back, grab a cup of coffee (or tea), and let's get started! // This source code is subject to the terms of the Mozilla Public License 2.0 at mozilla.org // Mizar Example Code - Lesson I - Coding an indicator // version 1.0 - April 2023 // Intellectual property © Mizar.com // Mizar-Killer-Long-Approach ("Mikilap") //@version=5 // Indicator script initiation indicator(title = "Mizar-Killer-Long-Approach", shorttitle = "Mikilap", overlay = true, max_labels_count = 300) // Coin Pair with PREFIX // Bitcoin / USDT on Binance as example / standard value on an 60 minutes = 1 hour timeframe string symbol_full = input.symbol(defval = "BINANCE:BTCUSDT", title = "Select Pair:", group = "General") string time_frame = input.string(defval = "60", title = "Timeframe:", tooltip = "Value in minutes, so 1 hour = 60", group = "General") int length = input.int(defval = 21, title = "BB Length:", group = "Bollinger Band Setting") src = input(defval = close, title="BB Source:", group = "Bollinger Band Setting") float mult = input.float(defval = 2.0, title="BB Standard-Deviation:", group = "Bollinger Band Setting") float lower_dev = input.float(defval = 0.1, title = "BB Lower Deviation in %:", group = "Bollinger Band Setting") / 100 int length_rsi = input.int(defval = 12, title = "RSI Length:", group = "RSI Setting") src_rsi = input(defval = low, title="RSI Source;", group = "RSI Setting") int rsi_min = input.int(defval = 25, title = "", inline = "RSI band", group = "RSI Setting") int rsi_max = input.int(defval = 45, title = " < min RSI max > ", inline = "RSI band", group = "RSI Setting") // Defintion of a Pine Script individual function to handle the Request and avoid Repainting Errors Function_Mikilap(simple string coinpair, simple string tf_to_use) => int function_result = 0 bool barstate_info = barstate.isconfirmed open_R, high_R, low_R, close_R = request.security(coinpair, tf_to_use, ) // Bollinger part of MIKILAP src_cp = switch src open => open_R high => high_R low => low_R => close_R lower_band_cp = ta.sma(src_cp, length) - (mult * ta.stdev(src_cp, length)) lower_band_cp_devup = lower_band_cp + lower_band_cp * lower_dev lower_band_cp_devdown = lower_band_cp - lower_band_cp * lower_dev bool bb_entry = close_R < lower_band_cp_devup and close_R > lower_band_cp_devdown and barstate_info // RSI part of MIKILAP src_sb = switch src_rsi open => open_R high => high_R low => low_R => close_R rsi_val = ta.rsi(src_sb, length_rsi) bool rsi_entry = rsi_min < rsi_val and rsi_max > rsi_val and barstate_info // Check if all criteria are met if bb_entry and rsi_entry function_result += 1 if function_result == 1 and ticker.standard(syminfo.tickerid) == coinpair label LE_arrow = label.new(x = bar_index, y = low_R, text = " 🢁 LE", yloc = yloc.belowbar, color = color.rgb(255,255,255,25), style = label.style_none, textcolor = color.white, tooltip = str.tostring(open_R)) function_result // Calling the Mikilap function to start the calculation int indi_value = Function_Mikilap(symbol_full, time_frame) color bg_color = indi_value ? color.rgb(180,180,180,75) : color.rgb(25, 25, 25, 100) bgcolor(bg_color) // Output on the chart // plotting a band around the lower bandwith of a Bollinger Band for the active CoinPair on the chart lower_bb = ta.sma(src, length) - (mult * ta.stdev(src, length)) lower_bb_devup = lower_bb + lower_bb * lower_dev lower_bb_devdown = lower_bb - lower_bb * lower_dev upper = plot(lower_bb_devup, "BB Dev UP", color=#faffaf) lower = plot(lower_bb_devdown, "BB Dev DOWN", color=#faffaf) fill(upper, lower, title = "BB Dev Background", color=color.rgb(245, 245, 80, 80)) Open a command to send to a Mizar Bot. Let‘s continue coding Our target: Use our own indicator: Mikilap, to define the timing to send a standard JSON command to a Mizar DCA bot. (1) define the JSON command in a string, with variables for - API key - BOT id - BASE asset (coin to trade) (2) send the JSON command at the beginning of a new bar (3) setup the TradingView alert to transport our JSON command via Webhook/API to the Mizar DCA bot Below you can see the code, which defines the individual strings to prepare the JSON command. In the following, we will explain line by line, what each individual string and command is used for. // Defintion of a Pine Script individual function to handle the Request and avoid Repainting Errors Function_Mikilap(simple string coinpair, simple string tf_to_use) => int function_result = 0 bool barstate_info = barstate.isconfirmed open_R, high_R, low_R, close_R = request.security(coinpair, tf_to_use, ) //Text-strings for alerts via API / Webhook string api_key = "top secret" // API key from MIZAR account string symbol_prefix = str.replace(symbol_full, "BINANCE:", "", 0) string symbol_name = str.replace(symbol_prefix, "USDT", "", 0) string bot_id = "0000" // BOT id from MIZAR DCA bot // String with JSON command as defined in format from MIZAR.COM // BOT id, API key and the BASE asset are taken from separate variables DCA bot identifier: string api_key = "top secret" string bot_id = "0000" These both strings contain the info about your account (BOT owner) and the unique id of your bot, which should receive the JSON command. BASE asset: string symbol_prefix = str.replace(symbol_full, "BINANCE:", "", 0) string symbol_name = str.replace(symbol_prefix, "USDT", "", 0) The shortcut of the base asset will be taken out of the complete string for the coin pair by cutting out the CEX identifier and the quote asset. JSON command for opening a position: Entry_message = '{ "bot_id": "' + bot_id + '", "action": "' + "open-position" + '", "base_asset": "' + symbol_name + '", "quote_asset": "' + "USDT" + '", "api_key": "' + api_key + '" }' If you want to have more info about all possible JSON commands for a DCA bot, please look into Mizar‘s docs: docs.mizar.com As the JSON syntax requires quotation marks (“) as part of the command, we define the string for the entry message with single quotations ('). So please ensure to open and close these quotations before or after each operator (=, +, …). Current status: - We have the entry logic and show every possible entry on the chart => label. - We have the JSON command ready in a combined string (Entry_message) including the BOT identifier (API key and BOT id) as well as the coin pair to buy. What is missing? - To send this message at the opening of a new bar as soon as the entry logic is true. As we know these moments already, because we are placing a label on the chart, we can use this condition for the label to send the message as well. alert(): built-in function - We recommend checking the syntax and parameters for alert() in the Pine Script Reference Manual. As we want to send only one opening command, we are using the alert.freq_once_per_bar. To prepare for more complex Pine Scripts, we have placed the alert() in a separate local scope of an if condition, which is not really needed in this script as of now. if bb_entry and rsi_entry function_result += 1 if function_result == 1 alert(Entry_message, alert.freq_once_per_bar) if function_result == 1 and ticker.standard(syminfo.tickerid) == coinpair label LE_arrow = label.new(x = bar_index, y = low_R, text = " 🢁 LE", yloc = yloc.belowbar, color = color.rgb(255,255,255,25), style = label.style_none, textcolor = color.white, tooltip = str.tostring(open_R)) IMPORTANT REMARK: Do not use this indicator for real trades! This example is for educational purposes only! Configuration of the TradingView alert: on the top right of the chart screen, you will find the clock, which represents the alert section a) click on the clock to open the alert section b) click on the „+“ to create a new alert c) set the condition to our indicator Mikilap and the menu will change its format (configuration of the TradingView alert) For our script nothing else is to do (you may change the expiration date and alert name), except to add the Webhook address in the Notification tab. Webhook URL: api.mizar.com Congratulations on finishing the third lesson on TradingView - we hope you found it informative and engaging! You are now able to code a well-working easy Pine Script indicator, which will send signals and opening commands to your Mizar DCA bot. We're committed to providing you with valuable insights and practical knowledge throughout this tutorial series. So, we'd love to hear from you! Please leave a comment below with your suggestions on what you'd like us to focus on in the next lesson. Thanks for joining us on this learning journey, and we're excited to continue exploring TradingView with you!
Education
by Mizar_trading
2
Some simple DCA idea. Maybe a bit better than the average one ?Hello, everyone. This is my first idea, so please pardon me if anything goes wrong. With the bear knocking at the door a while ago, it seems that everything goes down. So maybe we should embrace the investor side ... The boring but rewarding path. On bear markets, everyone accumulates. The DCA it seems a viable option, as they say : "Time in the market beats timing the market". We could DCA by volume profile, Fibonacci retracements, or several other techniques. But why going so "complex" when we can make everything simple ? On Crypto, it's tested that we will see at least 6 consecutive "30% drops" after the latest "30% drop", if not even more. Influenced on this idea by our regretted mathematician, Mr. Fibo ... And applying it to the charts, I just have a new indicator with an embedded strategy inside. In order to do everything right , I am asking the community to give me feedback. And if there is a real demand for my creation, I will respond accordingly :) The questions will be : 1. Do you think this strategy will bring you profits ? If so, do you want to try my indicator for easier backtesting ? 2. How useful do you think it will be a trading automation website, to be launched in 2023 ? Dedicated to Risk/Reward ratio trades, but also containing this idea ? I am humbly awaiting your response, so ... Let's help each other ! Best regards, Ionuț
Education
by dogaruionut1993
3
DCA for beginnersI made a visual explanation investing mid/long-term with DCA and of how effective DCA is and how to do it based on a weekly chart, no matter how much money you got, you can adapt to your capital Understand that this is an example amongst many other and you are not obligated to follow this strategy, it's just to guide if you're new to DCA. It's not a financial advice. also, it's important to understand the market cycles, and know when it's a bullrun, a bear market and an accumulation & expansion phase
Education
by kaiju_crypto
🚩How to identify the bottom and BUY the crypto in time? 3 tips!🌟How to BUY crypto in time and with the possible highest RETURN? The correct answer is during the capitulations. 🎯Capitulation is when even patient and experienced traders start to panic, but this is the opportunity time (Jan 2015, Nov 2018, Mar 2020, May 2021). 🔶How to buy crypto during the capitulations? Use the dollar cost average (DCA) strategy. This strategy allows you to buy crypto by parts without risking all of your capital. 🔶How to use DCA strategy? This strategy helps to average the BUY price. You can only sell at the top and buy at the bottom by accident. In real life, this strategy helps to average the buy price of a crypto. For example, back in 2019, you bought Bitcoin 3 times at $3,000, $4,000, and $5,000. The average purchase price in this case is $4,000. If the price go lower, you would average the price, if it rose, you already bought at a good price. Also, you can BUY at the weekly candle close during the capitulions. It is important to use the equal parts of the capital to buy (1/10, 1/20 etc.). Another simple example is shown on the chart😉 🔶How you can identify a capitulation? 1. Look at the volumes and record liquidations as shown on the chart. The liquidation of 50-100k Bitcoins is the best indicator. 2. Look at the percentage of drop from the highs. Historically, a price drop by 65-80% has been the bottom of the market. 3. Use the indicators that show the bottom of the market. Read this idea about the 🔋Greenwich indicator. It shows both the top and bottom of the market. So when BUY signals (green diamonds) appear, you can use this indicator to buy crypto by parts. 🔶Why does the DCA strategy work? Bitcoin, like U.S. stock markets, is in a long-term Uptrend. After buying Bitcoin in 2017 at its ATH ($18-19k), investors are now still at +100% profit. And as long as this trend is not broken this strategy will work. For example, the U.S. stock market has been in uptrend for over 80-90 years. 💻Please write in the comments if you still have questions about the DCA strategy or how else you can identify the bottom. What methods do you use for that? 🎇 Press the "like"👍 button, write comments and share with your friends - it will be the best THANK YOU. P.S. Personally, I open an entry if the price shows it according to my strategy. Always do your analysis before making a trade.
BITSTAMP:BTCUSDEducation
by Yuriy_Bishko
33
3 Ways To Invest In Crypto Market WITHOUT Education 💡You got a busy life and you don't have time to research and learn about thousands of cryptos, Or you maybe don't see yourself and your life a trader, Maybe aren't even interested in capital market. You just heard Crypto Market is gaining a lot of profit and you just don't want to miss it.. You know what?? You hear from a Shit Coin.. You buy some.. And You will lose most of or maybe all your money .. This IDEA will guide you through this situation, it will let you know how to invest successfully (probably), in crypto market. I tried to minimize the risk for you.. SHALL WE BEGIN??? There are three possible ways, the First one will cost you money, the Second and the Third are free of charge. FIRST: Go to an expert consultant. The only thing you need to do, is to research and find suitable expert consultant for yourself. After that everything is done. He/She, will gather some of your personal information to know you better to arrange a personal crypto portfolio.. This type of portfolio is uniquely designed for you and your personal goals.. And of course this way will cost you money due the type of expert you find. SECOND: Bitcoin & Ethereum. Clear your mind from whatever exciting coin and token you hearing all around the social media or you friends.. Bitcoin and Ethereum are the King and the Queen of the market, AND NOTHING ELSE MATTERS... Try to calculate how much money can you HOLD or HODL for at least 5 YEARS . Buy Bitcoin/Ethereum with that money and store it in a safe place and just don't think about it anymore until that 5 year deadline comes up. I believe you will be surprised when you see the outcome of your investment. And don't remember that at least 5 year is so important. free of charge this one. THIRD AND LAST: DCA, Dollar-Cost Averaging. Did you remember older members of the family always told us, don't spend all your income. Put some of your income into the bank, monthly. It'll come handy some day. Dollar Cost Averaging is something like that, and you know what?? It will work perfectly on Cryptos. The only thing you need to do, is to calculate you monthly costs and income. After that promise something to yourself, I WILL SAVE SOME OF MY INCOME INTO CRYPTO EVERY MONTH. It can be %5, %10, %15,... whatever number you and your life feel comfortable with. This DCA needs Three situations for you to concentrate on. First , You should keep your promise and buy crypto every month no matter what happens. Second , you should again wait at least 5 years . But don't worry the results will make you satisfied. And Third , Just buy Bitcoin or Ethereum again and nothing else. Don't remember The KING and The QUEEN. Why it is called AVERAGING??? because, no matter what is the price your filling your bag every month, so you will buy bitcoin in the deep, in the middle and in the top. This way you will buy your asset in an average price, without even knowing anything from the market. This one was free of charge too, and I believe from bottom of my heart you will be excited from the result.. This is it.. I hope you enjoyed this IDEA.. If you did so, push the LIKE button and feel free to talk to me in comment section :)
BITSTAMP:BTCUSDEducation
by ArshiaZojaji
2
Comparing a strategy with and without Safety OrdersOne important thing when day trading or scalping is risk management . To find the good balance between risk and reward . So I compared the same strategy with and without Safety Orders. Here's an idea explaining how safety orders work if you didn't know: The strategy used for this example is a daily pivot & consolidation breakout. Before I explain the results, a few definitions: Net profit = Gross Profit - Gross Loss. Basically the total profit earned by winning trades minus the losing trades. Percent Profitable = Percentage of winning trades divided by losing trades. I like to call it the winrate. Profit Factor = Profits divided by Losses. It tells how many times your profit is bigger than your loss. A strategy becomes profitable when the profit factor is greater than 1. Max Drawdown = Maximum consecutive losses. AKA, the biggest lose streak. A good indicator of how risky your strategy can be. A last few details: Both strategies have an intial capital of 10 000 €, 0.1% commission on each trade, and each order is a market one, to make sure everything gets filled. █ STRATEGY 1 - Take Profit & Trailing Stop Loss The strategy has a 7% Take profit and a Trailing Stop Loss that starts at 11%. Each order buys with the total capital without compounding (fixed 10k €) With 52 trades closed, the strategy has a profit % of 147 . It suffered a max % drop of 15.5% . The profit factor is of 2.19 . And finally, the winrate is 76.9% █ STRATEGY 2 - Take Profit & Safety Orders + Stop Loss The strategy has a 7% Take profit, 10 Safety Orders, each spaced by a 1% step, and a stop loss at 11%. Now the base order will only buy 100 €, while each safety order will buy 990 €. This is to ensure that the total capital is used and not more. Also note that the take profit is based on total trading volume. As the safety orders get filled, the target drops a bit lower. With 263 trades closed, which is due to the safety orders (5 per trade in average), the profit % drops to 79 . That is almost half of strategy 1. But, the max % drop is divided by more than 2 : only 6.9% ! The profit factor almost doubled , as it is now at 3.8 . Also, the Percent profitable increased to 83.6% . █ CONCLUSION This comparison is just an example. I did this little process over hundreds of strategies and the outcome is always the same: safety orders reduce the risk, even though they also reduce the net profit a bit, the overall profit factor is increased . So should you use them? It is up to you, but my answer is a big yes . Tips on automation: The simplest way to automate this is to place the safety orders using limit orders when the entry alert is received. Then close all deals upon take profit. If you want to use market orders, you'll have to place each safety order as the price drops through the steps. Indicators used in this example have restricted access. See my profile signature for more info. The backtest results for this pair are shown below.
Editors' picks
Education
by cyatophilum
25
Risk Management: Satefy Orders (Dollar Cost Average)I believe risk management is key, because sometimes, finding the perfect entry will not be enough. The market is what it is, and nobody can predict with 100% accuracy how the price will behave, even with all the great indicators we got out there. With that in mind, we should come prepared that the price will go against you, and we should take advantage of it, because most of the time it will bounce back up. This technique is especially useful in trading low timeframe also known as Scalping. The idea is to lower the inital entry order size , and split the remaining order size progressively through the safety orders as the price goes against you. This will make the total trade average entry - or break even - at a lower place than if you were simply trading the initial entry. That means the take profit will also be lower, because we can now take profit from the total order size/volume . Here is a simple example with a long: We buy in on the `LONG` label with 10% of our trade capital at around 9325$. Our take profit is 1.3% which makes a 9447$ target. But the price goes down, until it reaches our first safety order trigger line, at around 9231$. At this point we add 10% of our trade capital. It is the `DCA` label on chart. The break even line is now in the middle of the inital entry price and the safety order price, around 9275$. We still have our 1.3% take profit target, but it is now at 9396$ instead of 9325$. At last, the price bounces back up, as expected, and we take profit. Example with a short with 2 satefy orders: What are the risks? In the worst case scenario , which we know will happen at some point, the price does not go back up. It is important to know what are the risks so that we do no get liquidated or lose too much of our account. Let's dive into the numbers. We set up our strategy so that we have 3 satefy orders max, and the stop loss is on step below the last one. That makes 4 entries in total, and we decide to use 1% of our capital on each entry. Each step is seperated by 1% of the price to make things easier. When we hit stop loss, how many % do we lose? 1. On first safety order, price is down 1% and we traded 1%. That's 1% drawdown. 2. On second safety order, price is now down 2% for 1% of our order, and 1% for the other 1%. That is 1.5% drawdown. 3. Of the third safety order, we get 3% + 2 % + 1% = 6%/3 = 2% drawdown. 4. On stop loss, we get 4% + 3% + 2% + 1% = 10%/4 = 2.5% drawdown. => The price went down 4% but we only lost 2.5% of our inital capital. That is why we can say that safety orders reduce risk . /!\ Using leverage will multiply the risk. Using 2x we would have lost 5%. This can climb very fast, so be careful. One thing we can do when a stop loss is hit is to reverse our order, as most of the time our stop loss is hit because the trend is reversing. But again, be careful as it could cost you double.
BITMEX:BTCUSD.PEducation
by cyatophilum
5
How to interpret the results of my Dollar Cost Average indicatorGood morning to the US, Good afternoon to the EU, and Good night to ASIA This post has 2 purposes. 1) Showing you with the video below how to use my indicator Dollar-Cost-Average-Data-Window-Edition/ 2) Collect your likes and move up in the Pine scripters ranking (no shame) Let's start with the first goal here Here's a quick reminder of what's the Dollar Cost Average investment/trading method Dollar-Cost Averaging is a strategy that allows an investor to buy the same dollar amount of an investment on regular intervals. The purchases occur regardless of the asset's price. My Dollar Cost Average (DCA) indicator will analyse for the defined date range, how the DCA method would have performed vs investing all the hard earnt money at the beginning If you missed the video above, here's the link again Dollar-Cost-Average-Data-Window-Edition/ (Yes people ask me info that are on the description, screenshots, videos so please don't take it personally if I repeat myself a bit, trying to get my inbox empty by the end of day and receiving loads of questions already answered won't help :p) The DCA performance versus Your trading performance Full disclosure here before going further ..... it's not because a DCA methodology worked in the past that it's guaranteed to work in the future. Otherwise, trading will be too easy and we''ll be all multi-millionaires But as we say often that the "trend is your friend", dollar cost averaging on a bullish market in a daily/weekly/timeframe is often (but not always) a way to make a decent amount of money To be honest, most of my friends who dollar cost average are making much more than many of my traders friends who're staying hours per day in front of the chart. They take less trades but they're consistent with their method. DCA allows to reduce the stress of trading, the stress of chosing the right moment, the right news and the right crypto animal twitter accounts to follow. A day trader, is more likely to commit mistakes in my opinion. This is certainly not because you take more trades that you'll have a better performance and I hope my tool will highlight it for you. Taking more trades increase the risk of losing as each trade is an opportunity but also a risk and the higher the number of trades, the higher the risk is of losing your previous gains This educational post is not an invitation to DCA blindly and abandon your trading not all. Because if you do, I'll be unemployed... but a great way to introspect and think and ask yourself the good questions : - Am I outperforming a DCA method ? - If my personal performance is negative or way below the DCA, should I reallocate part of my trading capital into a DCA-oriented methodoogy ? The DCA humbled me a lot on assets that I was so sure to have a killer performance with my trading. It has been and still is a great trading lesson that I'm sharing with you today See you tomorrow for the strategy version of that indicator which will help you compare side to side your own strategy vs a DCA ____________________________________________________________ Feel free to hit the thumbs up as it shows me that I'm not doing this for nothing and will motivate to deliver more quality content in the future. - I'm an offically approved PineEditor/LUA/MT4 approved mentor on codementor. You can request a coaching with me if you want and I'll teach you how to build kick-ass indicators and strategies Jump on a 1 to 1 coaching with me - You can also hire for a custom dev of your indicator/strategy/bot/chrome extension/python
BITSTAMP:BTCUSDEducation
by Daveatt
1
Sawcruhteez Strategies: Advanced Dollar Cost Averaging Methods Disclaimer: If you are primarily interested in copying other people’s trades then this is not for you. However, if you are willing to put in the work that it takes to learn how to trade for yourself then you have found the right place! Nevertheless please be advised that you can give 10 people a profitable trading strategy and only 1-2 of them will be able to succeed long term. If you fall into the majority that tries and fails then I assume no responsibility for your losses. What you do with your $ is your business, what I do with my $ is my business. Click here for my Comprehensive Trading Strategy | Click here for my Comprehensive Trading Process In the previous post I outlined two strategies for How to BUY THE DIP . Both approaches are quite hands on, requiring consistent analysis and actively managing orders. They are primarily meant for individuals who actively buy and sell on an intra month or week basis. This post is for individuals with the hodler mentality, who simply want to implement a structured plan to buy BTC before planning on hodling for multiple years. This person is almost always going to find a dollar cost averaging approach as the best way to achieve his or her goal. If you are convinced that the next bull market is here, and you have money waiting patiently on the sidelines, then the goal is to convert the fiat into BTC as safely as possible. The goal is not necessarily to get the very best price, instead the objective should be to maintain a cost basis that is lower than the spot price. Dollar Cost Averaging into a bull market is a very simple and effective way to make that happen. If it is a bull market then the price will be consistently appreciating and after enough time consistent purchases are expected to result in an average cost basis than is lower than the current spot price. Dollar Cost Averaging is an approach that allows someone to regularly buy the same dollar amount of an asset. There are two ways to Dollar Cost Average, by time or by price. Anyone with a retirement account is Dollar Cost Averaging into the investment by time. Generally a specific dollar amount will be invested on a monthly basis, regardless of the price of the underlying asset. The other way to Dollar Cost Average (DCA) is by price. For example if an individual has X to invest then that person can enter 10% every time that the price appreciates 10%. This is a more aggressive approach and is done to ensure that a certain amount of exposure is achieved at a certain price point. When Dollar Cost Averaging by price it is possible to go months, or years, without making an entry. Conversely it would also be feasible to make multiple entries during the same month if the volatility warrants it. Both approaches are completely valid. The preferred method will be determined by an individuals circumstances and objectives. If one has disposable income on a monthly basis then using some of it to regularly buy BTC can be a very good option (DCA by time). On the other hand if an individual has a lump sum of cash waiting on the sidelines then it may be preferred to scale in as price appreciates (DCA by price). This can be done to ensure that the full lump sum is entered before the price gets to high and / or if a certain amount of the underlying asset is desired. Some businesses will implement this approach if they require a certain amount of a commodity to operate profitably. Those sitting in fiat may choose this route if they want to make sure they get at least X amount of Bitcoin. Dollar Cost Averaging by Time This approach is ideal for individuals whose monthly income exceed his or her expenses. A portion of this disposable income can be earmarked to buy BTC as long as the market is bullish. This post will go in depth about how to determine if the trend is bullish or bearish. However there are many technical tools that can be used to accomplish this goal. My preferred method is Consensio . The Ichimoku Cloud is also very powerful. When utilizing this approach it is very important to have a gameplan for what to do if the price declines for an extended period of time. If the value of the investment declines each month after buying more it can be very difficult to cope with mentally and financially. This is especially true if there is no backup plan for putting the purchases on a moratorium or executing a stop loss and exiting the position all together. Dollar Cost Averaging when the price is declining in a bull market is generally the best time to buy. That is because the same dollar amount buys more of the underlying asset. This improves the cost basis and is a primary advantage to the approach. However if the price continues to decline for months, or even years, then buying more of the underlying asset only increasing exposure to something that is depreciating. This is why it is very important to have a plan, and stick to it. If Dollar Cost Averaging by time then it could make sense to implement a stop loss system that is based on time. For example: if price depreciates for one quarter then stop adding to position for one quarter. If price continues to decrease for two quarters in a row then exit the position entirely. On the other hand if price increases during the second quarter then resume Dollar Cost Averaging in the third quarter. It would also be possible to implement a stop loss system based on price. For example: If price declines 15% then Dollar Cost Averaging is placed on a moratorium. If price declines 30% then stop loss is executed and position is exited. This approach is very tricky with Bitcoin. It will often decline 45% in the middle of a bull market. Therefore if this is the preferred strategy then it is important to backtest the percentages that an asset can decrease while remaining in a bull trend. This needs to be done for every asset individually before starting the purchasing program. Dollar Cost Averaging is usually done by those who intent to buy and hodl the investment long term. Most will do this blindly and that is very dangerous. It is very important to have a plan for profit taking, even if planning to hodl for years, or decades. The profit taking strategy can also be done based on time or price. Retirement accounts have a built in profit taking approach that is based on time. Most IRA’s will not allow one to withdraw until they are 59 ½ without severe penalties. Therefore the gameplan is generally to contribute on a monthly basis and start withdrawing / profit taking after enough time has passed to avoid paying penalties. If someone is Dollar Cost Averaging into Bitcoin, or another speculative investment, then it could be a good idea to implement a time horizon for withdrawing / profit taking. A generic gameplan would be to buy Bitcoin with 1% of monthly income, every month, for the next 5 years. Afterwards the plan could be to hodl for a minimum of 5 more years. 10 years from now it will be time to take profit, if all goes well then it could be possible to withdraw a small percentage (~ 5%) per year indefinitely. The main idea with this approach is to figure out the minimum time frame that you wish to hold onto the investment and at what point would you be able to consistently withdraw for the rest of your life without depleting the account. Another approach would be to take profit 1 year after each halving . Enough to cover the initial investment and then hold the rest for 10+ years. This can be an effective approach, but I believe it is inferior to taking profit based on price. That is because it is often best to sell when the price is high, opposed to waiting for a certain date. This is true for almost every investment class, Bitcoin might be a different story due to the depreciating supply. However taking profit based on price can be very tricky, especially for people with a set strategy that employs consistent buying. That is why I believe that it is crucial to learn how to identify the trend and have an incremental process for stopping the buys and then exiting. This is where Consensio works so well, it is a step by step process for recognizing trends and reversals. Dollar Cost Averaging by Price This approach is for individuals who have a lump sum of money on the sidelines who want to ensure gets entered by a certain price. Let’s use a hypothetical individual who has $25,000 in cash. That person, who we will call Dollar Bill, wants to make sure that they can get at least 2 BTC with that money. However, this person is relatively smart and does not want to get overexposed too early. Instead he intends to enter in pieces and only when the price is appreciating. Bitcoin currently is trading at $7,981 and Bill has decided that he cannot sit on the sidelines any longer. Insteading of FOMO’ing in he takes a step back to reevaluate the landscape and come up with a gameplan. He starts by analyzing the charts. Using prior highs he is able to identify major areas of established resistance and he notices three key price points where he wants to enter. The major areas of horizontal resistance are as follows: $8,219 | $9,619 | $11,491 If those levels are broken then the protagonist wants to make sure that he become known as Bitcoin Bill. He is telling all of his friends to buy right now and has grown tired of his moniker after learning about the perils of fiat money. To realize his dream of owning 2 Bitcoin he has implemented an initiative to scale in slightly above each level of resistance. The target entries are: $8,501, $10,251 and $12,251 This won't get the best possible price but it will ensure that he only adds to the position if the market is moving in his favor. Entries are set slightly higher than the levels of resistance as a way to try to avoid fake breakouts, otherwise known as bull traps. Our hero used to be known as Billy Bull Trap and he is determined to make sure that doesn’t happen again. Now he must calculate how much to enter at each level to ensure that he gets at least the 2 BTC that his heart so desires. Since there are three entry points he decides to separate his $25,000 desired exposure into thirds. The calculation goes as follows: $25,000 / 3 = $8,333 Enter $8,333 at $8,501 (target entry #1) = 0.9802 BTC Enter $8,333 at $10,251 (target entry #2) = 0.8128 BTC Enter $8,333 at $12,251 (target entry #3) = 0.6801 BTC Total = 2.4731 BTC Average Price / Cost Basis: $10,108 per BTC After going through the calculations he immediately enters the orders, using Good-Until-Cancel Stop Market Buy orders. A Stop Market Buy order will not trigger until a certain price is reached. Good-Until-Cancel means that it will remain active unless Bill changes his mind and manually cancels the orders. This type of order allows traders and investors to enter positions as soon as the price reaches his or her desired level. This can be very beneficial for those who do not want to wait at a computer all day and night for the right time to enter. They also work very well in volatile markets that are open 24/7 for people who like to sleep without a price alert alarm. By inputting the orders right now Bill knows that he will be able to buy Bitcoin at the prices he wants regardless of when it happens or where he might be. This is a great option for Bill, who is an avid golfer that spends all of his spare time working on his short game in hopes of earning another new moniker. He despises being called Double Bogey Bill by his golfing friends. It is important to note the difference between a Stop Market Buy order and a Stop Limit Buy order. As the name suggests a Stop Market will trigger a market order to buy as soon as the price is reached. This guarantees a fill, but means that there will often be some slippage. If markets are moving fast and breaking through resistance then there may be a relatively small amount of liquidity available in the order books. If that is the case then it is possible to pay a much higher price than expected. For example: if a stop market order to buy 0.97 BTC is triggered at $8,501 then there needs to be at least 0.97 BTC available to be sold at $8,501 on that individual exchange. If not then slippage will occur and a higher price will be paid. It is entirely feasible that the market order will go all the way up to $8,600+ before filling. This is especially true for large orders and / or exchanges with lower liquidity. Individuals that want to avoid slippage will use Stop Limit Buy orders instead. This will trigger a limit order that will only get filled if someone else market sells at that price. If there are enough market sellers at that price then the full order will get filled. If not there the limit order will be in danger of getting blown right through. When price has a legitimate breakout there is generally an overwhelming amount of buyers and very few sellers. If there are few sellers then it means a buy limit order has a high risk of not getting filled. There are pros and cons to each order type. As is often the case it will come down to an individual to determine what is best. Stop Market orders will always get filled but can often be at a worse price than expected. This risk is greatly minimized for smaller position sizes and / or higher liquidity exchanges / assets. Stop Limit orders will never experience slippage but they will be at risk of getting skipped over. This risk is greatly increased for highly volatile markets. Bill is determined to buy a minimum of 2 BTC for the $25,000 that he has available. Using Stop Limit orders is out of the question for Bill because the risk of getting skipped over is much greater to him than the risk of paying a slightly worse price. Furthermore his calculations show that he can expect to get 2.47 BTC based on his target entries, therefore he feels confident that he will end up with a minimum of 2 BTC even if he experiences significant slippage. With a gameplan in place and orders on the books it is possible to be prepared for upcoming price action before it happens. Being proactive instead of reactive is the primary differentiator between emotional investors and the proverbial smart money. Being able to execute that plan is what separates the pros from the wannabes. Dollar Cost Averaging by price is not designed to buy in at the cheapest price. Instead it is meant to ensure that a certain amount of the underlying asset is acquiring and that you are buying into a market that is appreciating. This approach should absolutely be combined with a profit taking strategy. Many who buy in based on certain price levels will prefer to exit at certain price levels as well. For example Bill might decide to sell 0.5 BTC at $20,000 and 0.5 BTC at $100,000. After recouping more than his initial investment he may choose to let the rest of the position ride indefinitely since he now has a negative cost basis (withdrawn more than was originally invested, while still maintaining some of the original exposure). This is by far my preferred approach, and is very possible in a crypto bull market with the right plan and execution. Daily Dollar Cost Averaging A very effective way to Dollar Cost Average by time is to buy a very small amount every day until the desired amount of exposure is achieved. This can be a good strategy for individuals with a disposable income as well as for those who have a lump sum to invest. Those with a lump sum can enter 0.25% - 0.5% of the capital on a daily basis. This will process would take 200 - 400 days to get fully entered. If that is too long for an individual’s taste then it is possible to enter a higher percentage, however I would not consider doing more than 1% per day. Individuals with disposable income on a monthly basis can enter 3.33% per day. That will enter the full amount before the month is over. Then the following months surplus is used to continue buying the same amount per day. Exchanges like Coinbase and Gemini have an option to set a recurring purchase for x amount. This can be a great option for individuals who do not want to Dollar Cost Average by time, however this could obfuscate valuable lessons. Manually doing a Daily Dollar Cost Average can be a tremendous learning experience, especially for those who are uninitiated to active buying and selling. If you decide to use this approach then pay very close attention to the emotions that you are feeling when making the purchase. Are you motivated to buy when price is down 10% over the last 24 hours? Do you feel like buying more than the predetermined amount when the price is up 5 - 10%+ over the last 24 hours? I would strongly suggest keeping a journal that details emotions when implementing the Daily Dollar Cost Average approach. This will enlighten you to when the market is controlling your emotions and when you are prone to making poor decisions. Combining Dollar Cost Averaging with Buying the Dip In the first post I outlined multiple strategies for How to BUY THE DIP . In this post we covered multiple Dollar Cost Averaging methods. It is important to note that these two approaches are not mutually exclusive. In fact they can complement each other quite nicely. I love buying dips in Bitcoin bull markets. If done properly it be extremely rewarding. However it is highly risky and can be very costly if not done effectively. The risks include: 1) Buying a dip that is only the tip of a major selloff 2) Buying a dip and getting whipsawed out of the position right before the market explodes to the upside 3) Waiting for a dip that never comes and letting price get away to the upside As is generally the case when presented with multiple desirable options I prefer to use a combination of Dollar Cost Averaging and Buying the Dip . I find this to be very beneficial to my pocketbook as well as my psyche. Being stuck on the sidelines waiting for a dip can cause a lot of anxiety. That stress can be greatly alleviated by knowing that there is a Dollar Cost Averaging approach in place. Buying small amounts as the price appears to be running away also helps to be patient about waiting for a dip. I like to set a portion of my fiat aside to buy dips and I will use the remainder to start Dollar Cost Averaging. I prefer a ratio somewhere along the lines of 60% for buying dips and 40% is used for Dollar Cost Averaging. I may go as high as 70% / 30% with that ratio depending on market conditions. For individuals who have less experience, or those who do not have the time available to analyze charts on a daily basis, I would suggest a much different ratio. Something along the lines of 10% - 25% for buying dips and the rest set aside to Dollar Cost Average. I think it is always good to have something available to buy when the price dips. The best buying opportunities often occur when Bitcoin drops 30% - 40% while remaining in a bull trend. Having at least 10% of your desired exposure set aside for times like this can be very beneficial. Therefore even if I was committed to a Dollar Cost Averaging approach I would still want some set aside to buy when Bitcoin is oversold in a bull market. While this approach will never get you fully entered in at the bottom, it will be a reliable way to gain exposure into markets that are moving in your favor. My goal is to minimize risk and maximize strike rate. Utilizing an approach that combines buying dips with Dollar Cost Averaging is the best way that I have found to do that. The last puzzle pieces are learning how to identify the trend and manage stop losses. I use the 50 and 200 Day EMA’s to determine the trend. If the 200 EMA is moving up, with the price above and a golden crossover with the 50, then it is a bull market. When Bitcoin is in a bull market then I want to establish a significant amount of exposure while staying flexible and properly attending to my risk. I also use the 50 and 200 Day EMA’s to determine my stop loss. As long as price is above and the trend is up then I want to be in. As soon as the price falls below and the direction of the EMA starts rolling over then I want to start scaling out. If a death cross occurs then I want to be fully out of the position. Another effective way to manage stop losses is with the Bill Williams Fractals on the daily and weekly charts. Through learning how to identify the trend and properly manage risk it is possible to consistently beat the markets average rate of return of a statistically significant sample size.
BITSTAMP:BTCUSDEducation
by Sawcruhteez
7
Wow! What a dogi!! Incoming ... Big Candles!I first published this chart set up via screen shots posted to twitter. Feb 23rd, 2019 See @golftothecore on twitter. This setup was posted just after the last giant narrow dogi with long wicks above and below (red dogi). I added the "slam down zone" on March 8th. Again, check the twitter. This chart set up was a word to the FOMO crowd ... Exercise due diligence and wait for the market to come to you. Make your own f**king coffee, skip Starbucks, and put lottery money in. Stop buying scratch offs and DCA BTC at the bottoms of long red candles ... BTC fell right into my first purple zone. Incoming, Incoming! Giant candle! This is the first time I am publishing to Tradingview. Cheers, Jeffrey Jay Moore
BITFINEX:BTCUSDEducation
by toeintocrypto