What is DCA Martingale?
The DCA Martingale strategy is a hybrid investment approach that combines two concepts:
- DCA (Dollar Cost Averaging): It is a strategy in which an investor regularly buys a certain quantity of a financial asset regardless of its current price. This approach aims to reduce the impact of short-term volatility and allows investors to accumulate the asset over time, taking advantage of the average purchase prices.
- Martingale: It is a betting theory based on the concept of doubling the bet amount after each loss, with the goal of recovering previous losses and generating long-term profit. This strategy is commonly used in speculative games, where players increase their bets after each loss, hoping that eventually, a win will compensate for all previous losses.
In terms of investment, the DCA Martingale strategy means that the investor continues to buy a specific asset regularly, regardless of the price, but also increases the quantity purchased each time the price falls.
The DCA Martingale strategy offers interesting opportunities, but it is important to remember that all investments involve risks. It is essential to conduct thorough research, diversify the portfolio, and consider financial goals and risk tolerance. No investment strategy is guaranteed, so staying informed is necessary. Adopting a balanced approach and seeking professional guidance when needed are fundamental elements of a successful investment strategy.
How to use the DCA Martingale strategy in Anny?
When creating a trade signal, you can choose the DCA Advanced (Martingale) entry method. This option presents several configuration parameters and a simulation table. This table facilitates understanding by predicting the orders that will be created based on the defined configuration. Simply make adjustments to the parameters and view the order projection.
The parameters that you can configure are:
- Base order size (%): Percentage of investment that will be used only in the first order (base order). For example, if you set it to 10%, and the investment in the signal is set at $100, it will result in an initial order of $10. The remaining $90 will be proportionally distributed among the other orders (safety orders), taking into account the other configuration parameters.
- Base price deviation (%): It is the percentage difference from the required price to place the first order. For example, if you set a value of 1% and the current price of the coin is $1000, the first order will be created at a price of $990, i.e., 1% lower.
- Safety order size multiplier: It is used to multiply the amount of funds used from the second order onwards (safety orders). If you set a multiplier greater than 1, it will make the last orders have a larger quantity than the first ones, and if you set a value less than 1, it will have the opposite effect, with the last orders being smaller.
- Price deviation multiplier: It is a multiplier relative to the percentage price deviation. If you use a value greater than 1, it will gradually increase the percentage price deviation between orders. If you use a value less than 1, it will have the opposite effect, decreasing the percentage as the orders progress.
- Price deviation: It is the percentage difference from the required price to place the subsequent orders (safety orders) after the first (base order). For example, if you set a value of 1% and the first order was already 1% below the current price, this means that the second order will be created 2% below, the third 3% below, and so on.
- Maximum amount of orders: It is the maximum number of DCA entry orders that can be created throughout the trade. All orders will be placed at the limit on the exchange's order book.
- Maximum amount of open orders: This is the number of orders that can be placed in advance in the exchange's order book. In other words, it is the number of orders that will be open at the same time. The remaining orders will be placed after these are filled, maintaining the maximum number of open orders.
Rule: for the entry, if any of these open orders have an error, none of them will be executed. For example, if a maximum of 5 open orders is selected at the same time, and there is an error in the third order among the first 5 entries, none of them will be executed because the entry is considered as a whole package.
These are the parameters necessary to configure the DCA entry strategy. As they are defined, it will be possible to visualize the order forecast in the simulation table. It is also possible to configure some simulation parameters, allowing you to define the allocation value and the simulated take profit percentage.
When configuring your DCA entry, make sure to balance the maximum number of orders with your allocation value, as the order sizes may become smaller than what is allowed for the currency on the exchange.
Example of errors:
Notifications will not be sent every time new orders are placed. Notifications will be sent when a proportion of 25% of orders is filled. For example, in the case of 200 orders, an entry notification will be sent and then notifications will be sent when 50 orders are filled. Another notification will be sent when 100 orders are filled, and so on.
The DCA Martingale strategy can be an interesting approach for investments, combining the regularity of purchases with adaptation to the asset's price. By using Anny, you can explore and leverage this strategy in your investment journey, positioning yourself well to pursue your financial goals in a positive and responsible manner.
- If you place a manual SL order, you must cancel open DCA orders.
- If you want to exit a DCA position prematurely, simply make a Take profit. Open DCA orders will be automatically cancelled.