How a DCA bot works: base order, safety orders and take profit

A DCA (dollar-cost averaging) bot buys a coin in several steps instead of one. Each extra buy lowers your average entry price, so the price only has to recover part of the way for the deal to close in profit.

The parts of a deal

• Base order: the first buy that opens the deal, sized in the quote currency (for example USDT).
• Safety orders: additional buys placed at set price drops below your entry. The price step says how far the price must fall for the first one, and the step multiplier spaces the later ones further apart.
• Volume multiplier: makes each safety order larger than the one before, which pulls the average price down faster.
• Take profit: the percentage above your average price at which the whole position is sold.
• Stop loss: an optional exit that limits the damage if the price keeps falling.

When does a deal start?

A bot can open a deal immediately, from a signal, or when entry conditions you chose are met. Bots that are running but holding nothing are simply waiting for those conditions.

What to check before you run it

A DCA bot is strongest in markets that dip and recover. In a long one-way drop, every safety order fills and the stop loss, or a large unrealised loss, decides the outcome. Run a backtest first, and read how much capital a DCA bot needs so the whole ladder is fundable.