Getting Started with the Bitsgap DCA Trading Bot
Introduction
Dollar-cost averaging (DCA) is a strategy to divide your investment across periodic buy or sell trades to get a better average entry price. This allows you to reduce the impact of volatility and price change on the overall position.
The main idea of the DCA Bot is the repeated purchasing or selling of a coin in small amounts at price levels that are located evenly from each other. This approach minimizes the market impact on your open position.
When do I need to use the DCA Bot?
You want to use the DCA Bot when you need to cycle your trading with powerful technical signals and effective risk management tools, allowing you to automate your daily trading routine completely. Our DCA Bot is a Swiss Army knife for automated trading, which outperforms the market on any time scale, whether you are a long-term investor or an intraday trader.
Key Takeaways
Here is a quick overview of what the DCA Bot can do in particular:
- Finding the right moment to enter and exit a trade based on one or more technical indicators.
- Building a DCA orders grid for every cycle to get a better average entry price.
- Reducing the trade size when it is needed for safe recovery.
- Limiting your risks and drawdowns while letting your profits flow and grow.
Getting started
When creating a DCA Bot, you can choose a trading direction and open a Long or a Short position.
- Long: buying position where the bot will trade a base currency to accumulate profit in a quote currency.
Your bot will open a position by buying the base currency. Below that trade, it will place the DCA (buy) orders and the Take Profit (sell) order above. When the price rises, your bot sells all the purchased base currency at the Take Profit level, generating profit. It means that the cycle is over, and the bot opens a new one with the initial investment amount.
- Short: selling position where the bot will accumulate profit in the base currency.
Your bot will open a position by selling the base currency. Above this trade, it will place the DCA (sell) orders and the Take Profit (buy) order below it. If the price rises, the bot will sell more base currency and acquire the quote currency with the DCA levels. When the price drops, your bot buys the base currency back with the Take Profit. Once the cycle ends, the bot opens a new one with the initial base currency investment.
Please follow our step-by-step instructions below to learn how to create and run your first Long and Short DCA bot from scratch.
How to create a Long DCA Bot
Step 1: Select a bot type
To start a new DCA Bot, click the [Start new bot] button in the Bots page's top menu.
From the list of all available bots, select [DCA Bot]. This will reveal a new widget on the right corner of your screen where the settings of your DCA Bot can be adjusted.
Step 2: Customize the bot’s settings
On the right side of your screen, a menu for creating your first DCA Bot will be shown, where you can select the exchange, the pair, the strategy, the investment and set the advanced settings if you want to customize them to your strategy.
Read more about advanced settings in our Customize Advanced Bitsgap DCA Bot Settings article.
Start by selecting an exchange and a pair. Click the “Exchange” window to choose an exchange, then “Pair” to set the trading pair. Once this is done, move to the following step.
Choose the Long trading strategy. This bot will buy the base currency and then profit from selling it as the price increases. The profit will be accumulated in the quote currency.
Enter the total investment you want to operate with or use the slider to specify the percentage based on your available trading balance. The "Investment" field shows an approximate investment in your quote and system currencies.
If you want to speed up the bot setup process, check out the Quick Setup field. It offers preset configuration templates - sets of predefined bot parameters based on the presumptive time you plan to run your bot for:
- Short-term - the best for bots that will work for up to 3 days.
- Mid-term - more suitable for bots operating for up to 7 days.
- Long-term - a great solution for bots that you want to trade with for 25 days +.
Don't hesitate to learn more about the Quick setup options in our article - Launcing your bot with Quick Setup.
"Available for bot use" is the balance the bot will consider for trading. The bot can use a maximum of 95% of your currently available balance, and the rest is reserved to cover any trading fees taken by your exchange.
You can also customize your bot’s advanced settings in the "Manual Adjustment" section. Otherwise, your bot will be launched with the following default parameters:
- Immediate bot start;
- Limit order as your base order type (opening the position) to ensure that base coins are purchased at the best possible rate and avoid price slippage;
- 5 DCA orders with a step of 0.5%;
- The amount and step multipliers at the x1.3 ratio;
- Limit Take Profit order based on the weighted average buy price.
You can learn more about each step in that section in our article - Customize Advanced Bitsgap DCA Bot Settings.
Step 3: Backtest
Backtest allows you to evaluate the bot performance based on historical data of a trading pair for a selected period. This feature may help you understand your bot's settings and optimize them for the selected trading pair.
To backtest your bot settings, click on the [Backtest] button. In the pop-up window, you will see the calculated bot results (bot profit) with the current settings for the past 30 days (by default), like in the example below.
Step 4: Bot overview
This is the final step before launching the bot. Here you can review all the selected settings.
Preview
- Exchange;
- Trading pair;
- Strategy;
- How much you have invested in the bot;
- Base order settings (size, type);
- DCA orders settings (size, quantity, step);
- The Amount and Step multipliers;
- Take Profit and Stop Loss details (price change percentage, order type);
- Risk management tools.
If changes need to be made, go back by clicking on the arrow. Otherwise, hit the [Start bot] button to get started.
How to create a Short DCA Bot
Step 1: Select a bot type
To start a new DCA Bot, click the [Start new bot] button in the Bots page's top menu.
From the list of all available bots, select [DCA Bot]. This will reveal a new widget on the right corner of your screen where the settings of your DCA bot can be adjusted.
Step 2: Customize the bot’s settings
When the type of your future bot has been chosen, the next step is to select its settings.
Start by selecting an exchange and a pair. Click on the “Exchange” window to choose an exchange, then “Pair” to set the trading pair. Once this is done, move to the following step.
Choose the Short trading strategy. This bot will profit from buying the base currency as the price decreases. The profit will be accumulated in the base currency.
Enter the total investment value you would like to operate with, or use the slider to specify the percentage based on your available trading balance. The "Investment" field shows an approximate investment in your base and system currencies.
If you want to speed up the bot setup process, check out the Quick Setup field. It offers preset configuration templates - sets of predefined bot parameters based on the presumptive time you plan to run your bot for:
- Short-term - the best for bots that will work for up to 3 days.
- Mid-term - more suitable for bots operating for up to 7 days.
- Long-term - a great solution for bots that you want to trade with for 25 days +.
Don't hesitate to learn more about the Quick setup options in our article - Launcing your bot with Quick Setup.
"Available for bot use" is the balance the bot will consider for trading. The bot can use a maximum of 95% of your currently available balance, and the rest is reserved to cover any trading fees taken by your exchange.
You can also customize your bot’s advanced settings in the Manual Adjustment section. Otherwise, your bot will get started with the default parameters as follows:
- Immediate bot start;
- Limit order as your base order type (opening the position) to ensure that the base coins are sold at the best possible rate and avoid price slippage;
- 5 DCA orders with a step of 0.5%;
- The amount and step multipliers at the x1.3 ratio;
- Limit Take Profit order based on the volume-weighted average sell price.
You can learn more about each step in that section in our article - Customize Advanced Bitsgap DCA Bot Settings.
Step 3: Backtest
Backtest allows you to evaluate the bot performance based on historical data of a trading pair for a selected period. This feature may help you understand your bot's settings and optimize them for the selected trading pair.
To backtest your bot settings, click on the [Backtest] button. In the pop-up window, you will see the calculated bot results (bot profit) with the current settings for the past 30 days (by default), like in the example below.
Step 4: Bot overview
This is the final step before launching the bot. Here, you can review all the selected settings:
Preview
- Exchange;
- Trading pair;
- Strategy;
- How much you have invested in the bot;
- Base order settings (size, type);
- DCA orders settings (size, quantity, step);
- The Amount and Step multipliers;
- Take Profit and Stop Loss details (price change percentage, order type);
- Risk management tools.
If changes need to be made, go back by clicking on the arrow. Otherwise, hit the [Start bot] button to get started.
Analyze your bot’s performance
You can always track your bot's results in the detailed "Performance" window. This will help you better understand your bot's performance and results, as well as get more detailed information about each transaction. It can be found on the right-hand side after clicking on a necessary bot:
Here, you can see overall and daily bot profit, total and position PNL, trading time, and the number of completed transactions. It also shows the ratio of the quote and base currency in open orders and their current value.
Bot orders
You can find more information about your completed and open bot trades in the "Bot orders" tab. To access the tab, click [Bot actions] and select the [View details] option.
The “History” tab will display specific details on all the trades your bot has already completed. Here, you will see the following information:
- The time when each order was filled;
- Order side (buy or sell);
- Action (order type);
- Order amount in the base currency;
- Order price;
- Exchange trading fee;
- Profit per each trade;
- Total profit considering the applied trading fees.
Open orders tab
If you want to check the status of your bot open trades, head to the "Open orders" tab:
In the "Open orders" tab, you can find more info about the number of open orders, their time, side, type, amount, price, and status.
Modify bots
Whenever you want to adjust settings, select the bot you need and press [Bot actions] on the right-hand side.
Bot Actions Options
-
Manual position averaging - invest additional funds in the cycle to influence the current bot position.
Note
A new cycle will be opened on the originally chosen investment. Averaging only works for the current cycle.
To average the position, you will specify and check:
- Amount for averaging;
- Available balance;
- Current and new estimated position size in the base currency;
- Current and new estimated DCA price.
-
Close position by market - close the current bot position by selling (Long)/purchasing (Short) the base currency at the market price and start a new cycle.
If you choose this option, please check the following data:
- Current position size;
- Current DCA price;
- Current market price;
- Approximate PNL after selling/buying the base currency at the market price.
-
Modify bot - adjust some bot settings.
After choosing this option, the Manual Adjustment section will be opened. Here you can modify a base order placement condition, position Take Profit & Stop Loss, and Risk Management tools.
- If you change the "Position TP & SL" and "Risk Management" features, the modifications will become valid in the current cycle.
- When adjusting the base order or the Max. & Min prices, the changes will be applied in the next cycle.
Once all the necessary changes have been made, press [Confirm] to proceed.
Close bots
To close a DCA Bot, select the one you need, click on the three dots and choose the [Stop Bot] option.
Stop Bot Conditions
DCA Long:
- Keep (base currency) and (quote currency). This option will close all your open orders. The current amount of the traded currency will be transferred back to your available balance.
- Convert to (quote currency). By choosing this option, all the bot base currency will be sold at the market price, leaving you the results highlighted in the Total PNL column.
- Convert to (quote currency) - Set limit sell price. Your bot will get canceled, and the system will place a limit order at any price of your choice. This way, you can sell the bot's base currency and take profit at any selected level.
DCA Short:
- Keep (base currency) and (quote currency). This option will close all your open orders. The current amount of the traded currency will be transferred back to your available balance.
- Convert to (base currency). By choosing this option, all the bot quote coins will be used to buy the base currency back at the market price, leaving you the results highlighted in the Total PNL column.
- Convert to (base currency) - Set limit buy price. Your bot will get canceled, and the system will place a limit order at any price of your choice. This way, you can buy the base currency back and take profit at any selected level.
After deciding how you want to close your bot, press the [Confirm] or [Convert by...] button. This will initiate the process of shutting your bot down.
Restart closed bots
To restart a closed DCA Bot, go to the [History] tab.
Select the bot you prefer and click [Bot actions] -> [Restart].
Adjust the settings if needed, and proceed to the bot's preview tab. Double-check all the parameters again and start a bot by pressing [Start Bot].
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