What is DCA?
DCA (or “Dollar Cost Averaging”) is the practice of investing into a currency at preset intervals to reduce the average entry price of a trade over time and mitigate risk.
For example, when you enter a trade at once (all-in) you run the risk of purchasing on the market’s top only to see the price drop and end up hitting your stop-loss.
However, if you DCA, you can divide your investment into smaller pieces and buy the asset at various points over time at different prices, thereby getting a better average price for your position and greatly reducing risks.
How does DCA work with Hyndor?
In the following picture you can find a flowchart of how a DCA bot would act with the following settings configuration:
- Entry Strategy: Instant
- Max Trades: 5
- Perc Open: 2%
- Perc Close: 2%
The price of the market that is traded, is 100 USD at the time of the initial order.