What Is the DCA Trading Strategy?
Last updated
Last updated
The average cost method trading strategy is simple and easy to understand. It is similar to the logic of fixed investment. It is a strategy suitable for beginners. During the decline, it will continue to double the investment and increase the position to lower the average price. When the price rebounds, it will pay back more quickly than ordinary fixed investment.
Simply put, it is to openning a long and a short positions, to hold long and short positions at the same time.
Assuming that the price falls, the long order will continue to hold the position and the position will be covered when the decline reaches the seted ratio, then the short order will take profit when the decline reaches the seted ratio. On the contrary, if the price goes up, the short order will continue to hold the position and cover the position when the increase reaches the seted ratio, and the long order will take profit when the increase reaches the seted ratio.
This kind of two-way holding method avoids the shortcoming of one-way DCA in the one-way market, the account carries floating losses for a long time without profit output. In the case of two-way holding, one side is quilted and the other side fluctuates, and it will continue to make profits. This greatly improves capital utilization.
It can be said that Hedge DCA has brought the regression strategy to the extreme.
Smart T/P (Smart Take-profit)is a further optimization of the entire position take-profit. When the system position reaches 25% of the estimated total investment, and the price rises to the take profit point of the last order, it will trigger the last order to sell profit.
After turn on the Smart T/P, even if the current price does not reach the take-profit point of the entire position, you can still take the order and make a profit, which is especially suitable for staying in the swings market for a long time, after the one-side market.
If the price fluctuates near the last order point, you can turn on Smart T/P to opening a position in the last order, take profit in the last order, opening a position in the last order, take profit in the last order, etc., and make continuous profits in the volatile market.
However, after turn on the Smart T/P, when the price quickly returns to the entire take-profit point, the profit of the Smart T/P strategy is lower than the entire take-profit ; in addition, after the last order is taken-profit, the average position price rises, and the entire take-profit point is at It is far from the current price, which affects the entire take-profit cycle.
You can choose whether to turn on the Smart T/P according to the current market situation and your own needs.
The Smart T/P is only open to the spot, and the futures robot does not currently supported.
Under normal circumstances, after the price drop reaches the preset ratio, the system will covering the position normally. After the Smart Covering switch is turned on, the system will not immediately covering the position when the current position exceeds 25% of the predetermined total investment, and it needs to wait for the MACD indicator in a 1 hour cycle,the Bull and Bear strength returns to flat or reversed.
The purpose of the Smart Covering setting is to avoid premature top-up due to continuous one-side market conditions. Smart Covering can further lower the average position price and prevent heavy positions from being at a high price level. Especially for futures strategies, in the case of high leverage, the price continues to cover positions at high price levels. If the market continues to decline, the risk of liquidation will be greatly increased.
However, risk and return are always in direct proportion to each other. Turning on Smar Covering will miss the profit of the market correction after the downturn. uTrading is a strategy tool, and how to use it to its fullest depends on how individuals use it.
