Last updated: 24 May 2024
What is a Spot DCA?
Dollar-Cost Averaging (DCA) is an investment strategy that involves buying and selling an equal amount of assets regularly at different price points. It aims to achieve a better average price for the selected trading pair and reduce the impact of market volatility.
You can use Binance’s Spot DCA feature to automatically buy or sell a chosen amount of assets at a designated price deviation at a desired frequency.
*Risk Warning: The above parameter settings and calculations are for reference only. The effectiveness of a price difference, i.e., the trigger for a Spot DCA order, may vary depending on the trading pair you choose. The information presented here does not constitute financial or investment advice by Binance. All trading strategies are used at your discretion and at your own risk. Crypto trading carries a substantial risk and the possibility of both significant profits and losses. Binance shall not be liable to you for any loss that might arise from your use of Spot DCA. We strongly recommend you set stop-trigger orders in advance to prevent uncontrollable market movements from causing irreparable losses.
Differences between Spot Grid and Spot DCA
Spot Grid | Spot DCA | |
| Goal | Make profits on small price changes in volatile markets | Achieve a better average price and reduce the impact of volatility |
| Strategy | Quantitative trading, a strategy that involves buying or selling assets at preset intervals within a configured price range | Dollar-Cost Averaging (DCA), a strategy that involves buying and selling an equal amount of assets regularly at different price points |
| Trading/Orders Rationale | Each entry is paired with an individual exit | Multiple entries, single exit |
| Trading Bot Frequency | Depends on the number of grids you set between the interval upper and lower limits. In the arithmetic mode, each grid has an equal price difference. In the geometric mode, each grid has an equal price difference ratio. | Depends on the number of DCA orders triggered by the price deviation percentage. |
You can learn more by visiting What Is Spot Grid Trading and How Does It Work.
Spot DCA parameters
1. Price Deviation
Price Deviation refers to the price difference percentage that triggers DCA orders. You can set the price difference from 0.1% to 15%. For example, if you set 5%, this means that the bot will set a buy or sell order for every 5% change from the base order in the selected trading pair.
Price Deviation refers to the price difference percentage that triggers DCA orders. You can set the price difference from 0.1% to 15%. For example, if you set 5%, this means that the bot will set a buy or sell order for every 5% change from the base order in the selected trading pair.
2. Take Profit
Take Profit refers to the target profit percentage based on the average price (before the trading bot ends).
Take Profit refers to the target profit percentage based on the average price (before the trading bot ends).
- [Fix] is selected by default. Once the position increases by the take-profit percentage, the TP Order will close the position, and the bot will end this round. For example, you set the take profit as 5%. Once your profit reaches 5%, the bot will automatically end the round.
- If you select [Trailing], it will lock the profit by enabling the trading bot to remain open and continue to profit as long as the price moves in the selected direction and mode. When the trading bot moves in the opposite direction by a specific percentage, it will trigger an order and the bot will end this round. Note: [Trailing] may not be available for certain trading pairs.
3. Investment Amount Calculation
Base Order Size + DCA Order Size*(1+ DCA order size multiplier^1 ... DCA order size multiplier^(Max DCA Orders-1))
Note: The amount will be transferred from your Spot Wallet to your Tradings Bots Wallet and solely for this trading bot.
Note: The amount will be transferred from your Spot Wallet to your Tradings Bots Wallet and solely for this trading bot.
3.1 Base Order
The base order will be filled immediately upon starting Spot DCA if the price trigger is empty. You can customize the investment amount for the base order. For example, if you enter 1,000 USDT as the investment amount, your base order will be at most 1,000 USDT (including the trading fees).
3.2 DCA Order
DCA orders are the subsequent orders that will be filled when the price reaches the designated price deviation. You can customize the investment amount for your DCA orders. For example, if you enter 1,000 USDT as the investment amount, each subsequent DCA order will be at most 1,000 USDT (including the trading fees).
4. Max DCA Order
The maximum number of DCA orders that will be placed per round.
Advanced settings parameters
Advanced settings parameters
- Trigger Price: The price of the token that will trigger the trading bot to start. If left blank, the last price will be used as the trigger price.
- Price Deviation Multiplier: Multiply the price difference in the percentage at which DCA orders will be placed starting from the second entry. By default, this parameter equals 1, which means each additional entry will equal the Price Deviation %. Otherwise, the multiplier will take effect between each additional entry.
For example, you are on the buy side and open a long position at $30,000 for a BTC/USDT pair, with a Price Deviation of 1% and the Price Deviation Multiplier of 2.- Base Order = $30,000
- DCA #1 = Base Order - 1% = $29,700
- DCA #2 = DCA #1 - 1% * 2 = $29,100 (Base order - 3%)
- DCA #3 = DCA #2 - 1% * 2 * 2 = $27,900 (Base order - 7%)
- DCA Order Size Multiplier: Multiply the subsequent DCA Order investment amount(s). By default, this parameter equals 1, which means each additional entry will equal the DCA Order amount. Otherwise, the multiplier will take effect from the second DCA order onwards (The first DCA order remains default after the bot has started).
For example, your DCA order is 1,000 USDT, and your DCA Order Size Multiplier is set to 2. When the price reaches the designated price deviation, each additional entry will be multiplied.- DCA #1 = 1,000 USDT = 1,000 USDT
- DCA #2 = 1,000 USDT * 2 = 2,000 USDT
- DCA #3 = 1,000 USDT * 2 * 2 = 4,000 USDT
- Cooldown between Rounds: The rest period between each round. By default, the cooldown between rounds is 60 seconds.
- Lower and Upper Price Range: A price range of the selected token’s base order that the trading bot will only execute within. Note: For successive rounds, the base order executed may deviate from the price range due to market volatility.
- Stop-Loss: A stop-loss percentage that triggers the trading bot to stop the round.
- End the bot once stop-loss is triggered: Once the stop-loss percentage is reached, the bot will end itself and end the round.
5. Spot DCA Profit Types
| Total Profit (Total Profit / Total Investment) | [Buy Token] mode
[Sell Token] mode
Total Profit % = Total Profit / Total Investment (2 d.p.) (Regardless of mode) |
| DCA Profit (Sum of DCA Round Profits) |
DCA Profit % = DCA Profit / Total Investment (2 d.p.) |
| Floating Profit (Total Profit - DCA Profit) |
DCA Profit % = Floating Profit / Total Investment (2 d.p.) |
| Round Profit | [Buy Token] mode (Unit: Quote Asset)
[Sell Token] mode (Unit: Base Asset)
|
Spot DCA examples
You can use Spot DCA to automatically buy or sell a fixed amount of assets at a designated price deviation at a desired frequency. Let’s use BTC/USDT as an example.
Buy-side example
Suppose your trading bot parameters are set as follows:
- Price Deviation: 5%
- Take Profit: 10%
- Base Order: 1,000 USDT
- DCA Order: 1,000 USDT
- Max DCA: 2 orders
Using the above parameters, you need to invest 3,000 USDT (1,000 + 1,000 * 2 = 3,000 USDT).
You start Spot DCA by buying 1,000 USDT worth of BTC. Suppose BTC is at $30,000, you will get 0.0333 BTC. After that, the BTC price changed by 5% from the base order. The bot will buy more BTC by placing DCA orders up to 2 times based on the Max DCA you set (1,000 USDT per order). The bot will continue to run until it reaches the target take-profit percentage (10%).
| Current BTC Price | Changes in BTC Holding (4 decimal places) | Total BTC Holding (4 decimal places) | USDT per Order | Total USDT Spent |
| $30,000 | + 0.0333 BTC | 0.0333 BTC | - 1,000 USDT | 1,000 USDT |
| $28,500 | + 0.0351 BTC | 0.0684 BTC | - 1,000 USDT | 2,000 USDT |
| $27,000 | + 0.0370 BTC | 0.1054 BTC | - 1,000 USDT | 3,000 USDT |
| $31,292 | - 0.1054 BTC | 0 BTC | + 3,300 USDT | - |
| Round Profit | + 300 USDT* | |||
| *Please note that the above example does not include prevailing trading fees. Figures are simplified and may be subjected to rounding errors. | ||||
| Order Type | Price Deviation | Current BTC Price | Average Price of BTC Holding | Total USDT Spent |
| Base Order | -- | $30,000 | $30,000 | 1,000 USDT |
| DCA Order #1 | Drop 5% from the base order | $28,500 | $29,230 | 2,000 USDT |
| DCA Order #2 | Drop 10% (5% + 5%) from the base order | $27,000 | $28,447 | 3,000 USDT |
| Take Profit | Increase 10% from the average price | $31,292 | -- | -- |
| Round Profit | + 300 USDT* | |||
*The bot will continue to run until it reaches the target take-profit percentage (10%). In this example, the bot will end when this round completes. Please note that the above example does not include prevailing trading fees. Figures are simplified and may be subjected to rounding errors. | ||||
Sell-side example
Suppose your trading bot parameters are set as follows:
- Price Deviation: 5%
- Take Profit: 10%
- Base Order: 0.033 BTC
- DCA Order: 0.015 BTC
- Max DCA: 2 orders
Using the above parameters, you need to invest 0.0999 BTC (0.0333 + 0.0333 * 2 = 0.0999 BTC)
You start Spot DCA by selling BTC for USDT. For example, you sold 0.03 BTC at $30,000 for 1,000 USDT. With every 5% change in the BTC price from the base order, the bot will continue to sell more BTC for USDT up to 2 times based on the Max DCA you set and/or until it reaches the target take-profit percentage (10%).
| Current BTC Price | Changes in USDT Holding | Total USDT Received | Changes in BTC Holding (3 decimal places) |
| $30,000 | + 1,000 USDT | 1,000 USDT | - 0.0333 BTC |
| $31,500 | + 1,048.95 USDT | 2,048.95 USDT | - 0.0333 BTC |
| $33,000 | + 1,098.90 USDT | 3,147.85 USDT | - 0.0333 BTC |
| $28,350 | - 3,147.85 USDT | 0 USDT | + 0.110 BTC |
| Round Profit | + 0.010 BTC* (+10%) | ||
| *Please note that the above example does not include prevailing trading fees. Figures are simplified and may be subjected to rounding errors. | |||
| Order Type | Price Deviation | Current BTC Price | Average Price of BTC Holding | Changes in BTC Holding (3 d.p.) |
| Base Order | -- | $30,000 | $30,000 | - 0.0333 BTC |
| DCA Order #1 | Increase 5% from the base order | $31,500 | $30,750 | - 0.0333 BTC |
| DCA Order #2 | Increase 10% (5% + 5%) from the base order | $33,000 | $31,500 | - 0.0333 BTC |
| Take Profit | Drop 10% from the average price | $28,350 | -- | + 0.110 BTC |
| Round Profit | + 0.010 BTC* | |||
The bot will continue to run until it reaches the target take-profit percentage (10%). In this example, the bot will end when this round completes. *Please note that the above example does not include prevailing trading fees. Figures are simplified and may be subjected to rounding errors. | ||||