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How the DCA strategy works

The bot's entry / dollar-cost-average / exit logic explained without jargon.

The shape of one cycle

For each trading pair, the bot runs a cycle that looks like this:

  1. Wait for a price drop. When a pair's price drops by your configured percentage from a recent peak, the bot places an entry buy at the current market.
  2. If the price drops further, place a DCA buy. Each "DCA level" is a deeper buy at a lower price. The bot places level 2 once price drops another configured percentage, level 3 below that, etc. Each DCA level is a configurable multiple of the entry size (defaults shown in the pair config).
  3. Wait for a price rise. Once the pair has any position, the bot places a limit sell above the weighted-average cost basis (entry + DCA fills). The sell sits there until the market reaches it.
  4. When the sell fills, the cycle closes. The bot realizes the profit, frees up the capital, and resets — ready to start a new cycle on the next qualifying price drop.

Why DCA

Dollar-cost averaging spreads entries across price levels. If the market continues falling after your first entry, additional DCA buys lower your average cost — which means a smaller bounce is needed for the cycle to close in profit. The trade-off is that the deeper you DCA, the more capital is tied up in this pair while you wait for the bounce.

What the bot doesn't do

  • No leverage / margin / futures. Spot only.
  • No shorting. Long-only cycles.
  • No tax accounting. The bot tracks cost basis for cycle math, not for tax filings.
  • No prediction / news / sentiment. The strategy is pure mechanical price-action — drop triggers buy, rise triggers sell.

Per-pair configuration

Each pair has its own drop %, DCA level configuration, and max capital. See Configuring trading pairs.

What controls when a cycle closes

The sell price is computed from the weighted-average cost basis + your configured target gain. By default this is set conservatively so cycles close in modest profit; you can tune it per pair.

Stop-loss

If the price keeps falling well below your deepest DCA level, there's a stop-loss safety to limit further damage. See Post-DCA stop-loss.