2024-11-22 04:48:19The Dollar-Cost-Averaging (DCA) bots are automated trading bots to help traders build positions incrementally. Bybit’s DCA bots allow you to automatically buy coins based on a preset investment amount and time intervals within a specific period, thereby reducing the influence of market volatility.
The DCA bots are based on the Dollar-Cost-Averaging strategy, which is an investment strategy that helps you average the price of your coins by investing in a certain number of them on a regular basis.
Since you’ll be investing at regular intervals, DCA bots are suitable for most investors. Especially if you are a:
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Long-term holder of coins
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Long-term investor, and you don't care much about short-term coin price fluctuations
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An investor who can’t keep an eye on the market all the time
How does the Bybit DCA bot work?
Bybit allows you to create a DCA bot with one coin or a portfolio of up to five coins. Let's see how the DCA bot works by using an example.
Before learning more about DCA trading, let's briefly understand some parameters of the DCA bot order page to make it easier for you to understand the following example.
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How to Get Started with DCA Trading on Bybit
Example 1
Suppose Trader A sets up a DCA bot with the following parameters:
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Currency: USDT
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Select Cryptocurrencies: BTC and ETH
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Investment Frequency: 1 week
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Total Fixed Investment Amount: 1,000 USDT
○ BTC Fixed Investment Amount: 600 USDT
○ ETH Fixed Investment Amount: 400 USDT
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Max. investment amount for DCA bot (Optional): 5,500 USDT
Assuming that Trader A invests for five weeks, according to the weekly investment frequency, Trader A automatically performs a total of five transactions. The specific details are as follows:
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Please note that the system will automatically transfer the required amount of funds from your Bybit Funding account to the Trading Bot before each purchase.
During a five-week investment period, the average entry price for BTC and ETH is 28,200 USDT and 1,420 USDT, respectively, based on the following calculations:
BTC Avg. Enter Price (USDT): (29,000 + 28,000 + 27,000 + 28,000 + 29,000)/5
ETH Avg. Enter Price (USDT): (1,500 + 1,400 + 1,300 + 1,400 + 1,500)/5
In this case, Trader A buys 0.10645868 BTC at an average price of 28,200 USDT and simultaneously buys 1.41245423 ETH at an average price of 1,420 USDT.
Benefits
Example 2
If Trader A does not invest in batches through the DCA bot and buys BTC and ETH in one go with 5,000 USDT in the first week, the entry price and purchase quantity are as follows:
○ BTC Fixed Investment Amount: 3,000 USDT
○ ETH Fixed Investment Amount: 2,000 USDT
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We can see in this case that for the same investment amount, more BTC and ETH can be obtained by using DCA bot.
Note: In the above example, Trader A has set a max. investment amount of 5,500 USDT. Since the remaining 500 USDT isn’t enough to initiate the sixth auto-purchase — that is, each single investment is 1,000 USDT — the DCA bot will automatically close after the fifth auto-purchase. At the same time, 0.10645868 BTC and 1.41245423 ETH in Trader A’s DCA Bot will be returned to his Funding account.
Assuming that Trader A does not set the Maximum Investment Amount and the available balance in the Funding account is not enough for the next auto-purchase, Trader A will receive an email and notification to remind him to deposit funds into his Funding account.
If Trader A fails to deposit sufficient funds in time for the next auto-purchase, the DCA bot will be suspended. And after there are sufficient funds in the Funding account, it will be activated again at the next auto-purchase time.
Please note that the suspension of DCA bot due to insufficient funds will not automatically terminate it. If you want to terminate your DCA bot, please close it manually.
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