DCA Bots
Available to Premium and Professional users
Last updated
Available to Premium and Professional users
Last updated
DCA, commonly referred to as the Dollar Cost Average, is a popular accumulation strategy that often spans a long period of time. For experienced traders, the market is known to take on a random "walk." It is absolutely hard to time the market. Hence, it is also near impossible to buy an asset at its lowest price within the window of opportunity.
One of the most well-proven methods for accumulating an asset is the DCA strategy. Essentially, it aims to buy an asset periodically. The entry condition for DCA varies. The most common method is a Regular Savings Plan (RSP) model, popular within the traditional securities market. RSP is simply buying an asset at a fixed time interval, such as the first day of the month.
You may allocate a fixed amount of funds to your DCA bot, like you would for the Simple and Advanced bots. Alternatively, you may also set a No-Limit allocation. The DCA bot will keep deploying your capital until the capital in your brokerage account is insufficient to meet the current order. Upon encountering such a situation, the DCA bot will stop.
You must also set the amount of capital for each order that the DCA bot will use to buy the stock.
StockHero offers the following entry conditions for DCA bots
Fixed Time Interval
Technical Indicators (like Simple and Advanced Bots)
Buy Down
Sell Up
This mode simply configures the bot to buy at every fixed time interval. You may configure the bot to run every day, once a week, or on a specific day in a month.
This is similar to your Advanced bots' technical indicators (such as granular settings and a 2-hour trading interval). In addition, you can also include the Martingale strategy. Please read below for an explanation regarding Martingale.
This method allows traders to accumulate or dispose of assets as the prices trend down or up respectively. Users can employ the Martingale strategy in this method as well.
The Martingale strategy involves essentially increasing the size of each successive trade. The rate-of-increase may be any percentage you set. The premise for this strategy is that all trends will eventually turn around - a bad market cannot stay bad forever. And when the turnaround occurs, the last few trades (which would be the largest in size) will allow a trader to generate a profit much faster.
In StockHero's Martingale strategy, a trader can set XX% from the last trade. For example, if XX = 10%, and if the bot makes 1000 USD worth of purchase in the last trade, the next trade will be 1,100 USD worth of purchase. If XX = 100%, the next trade would be 2,000 USD worth of assets in size. The third trade would be 4,000 USD in size.
If a Martingale strategy is set, it will override the Per Order Amount and Fund Allocation values in the Trade Parameters tab.
IMPORTANT: If Martingale is enabled, it will override the Fund Allocation. Please note that the Martingale strategy can quickly deplete your capital!
