Topic: DCA: calculating orders size to cover current loss? (Read 121 times)

OP can use the following website https://dcabtc.com/

I agree with you. DCA is for buying, for long-term investment. With DCA, you can do it on

• Regular basis: daily, weekly or monthly. This approach does not take into consideration how price moves. You just load it up more on daily or weekly basis.
• Load it up more when price dives to a threshold you would like to do DCA: -20% or -30%.

What exactly is your goal? When you DCA when the price is lower than your current average purchase price, you will lower your average purchase price but you won’t be able to make your trade profitable without the price subsequently moving in your favor.

If you are down by 50%, you can buy nothing and you will break even once the price doubles from where it is. You can double the amount of bitcoin you hold by buying an amount of bitcoin that you already own at 50% below your current purchase price, which would lower your overall purchase price by 25%, and you would need the price to increase by 50% for you to break even.

I think you never tried this method, it works every time, the drawback, position size will increase exponentially by each new order so you have to ensure you have enough balance in your account till the retrace will happen.

DCA is a buying strategy, not a selling strategy. And I think it's generally a bad idea to have your current positions affect your future positions. That's how you can end up doing reckless things like chasing loss after loss or going all in after taking a big profit. Just ignore your leveraged positions and do some long-term Bitcoin investing. Don't think about when to sell, when the time will come, you will know it.

You can cover your loss by setting new order at different price with condition your new order to be in profit, this is because your position entry will change to the average between the position entry price and the new order price in case your new order  has the same size as the position.

In concrete, short position (rough calculation ignoring fees):
Margin # Entry Price # Mark Price # leverage #  Liquidation Price # PNL   # Actuals
$100   # $100         # $110         # x5         #  $120                 # -50% # $50

Assumption: new order size: $100 at CMP $110 will end up with:
$200 # $105         # $110         # x5         #  $126                 # -4.76% # $190.48      

So, is my new PNL / Actuals wrongly calculated? it should maintain the loss from initial order so it should be something like this?
$200 # $105         # $110         # x5         #  $126                 # -25% # $150      

One of the rules of trading is to never find a way to trade and gain back your losses, this is because it can lead to you having a kind of thinking that will make you to open position when risky and not necessary and resulting to more losses, this will later make you to be more vulnerable to losses until your total funds are gone.

With what I can see, you are still not good in trading, do not leverage, and do not try to increase your leverage. The more the leverage, the higher can be the gain or loss, but as you are still learning, do mot leverage as learners are vulnerable to losses. Just open 1x which is enough and learn more about trading.

The money you lose is gone and let it be a bygone and focus just only on and only about how you will gain and minimize losses and having a net gain. Use the amount you can afford to lose and learn more and have more experience.

Lastly, if you do not leverage, notice this, if you are losing, just do not close any position, it will surprise you when the market will reverse and favour the position you opened. Many newbies lose because they close position when losing, that is not trading but gambling, but can be used for leverage trading by experts, but if you go 1x leverage which means you do not leverage, do not close position while losing and e hopeful for a reversed market trend.

I will advise you to only use bitcoin for now to learn, altcoins are more risky, shitcoins can result to losses even for expert traders.

I trade isolated futures.
I think I have to experiment how this works for x5 leverage position and I'll share my results.

DCA is for hodlers, not margin traders. ^[1]

If you use leverage trades, afford your lose. You will have two options when your position is negative

• Cut loss
• Close your position

Depends on your collateral: Cross or Isolated. What you meant by DCA is applied for Cross-collateral margin position. It is risky, because there is no guarantee that your position will be safe after you do DCA. Worst, you will lose bigger capital when your position is liquidated.

^[1] https://dcabtc.com/

• Everything You Need To Know About Cross Collateral
• Isolated margin

Best: don't use margin if you are bad traders & are not confident to cut loss, close your position.
Acceptable: use Isolated margin. You will be able to control the amount you afford to lose.

$50 without leverage would put you back at $100, so technically zero PNL. The x5 leverage would do the same, but then you need to worry about what happens next (if the price goes up or down ).

I want to change my position entry level with this order in a way that my PNL will be 0.
So, a limit order of $50 + transaction fee shall do that or it should be $50 x 5 (leverage level) + fee?

You want to recover your loss?
In general, DCA works if the holding period is long. No one can guarantee you a profit but you can check it out yourself here- https://dcabtc.com/
I can't exactly got what did you mean though. There's a thread I made long ago on DCA with some holding period. This can be an example; doesn’t necessarily will have the same output now as well.
https://bitcointalksearch.org/topic/benefits-of-following-dca-dollar-cost-averaging-5168667

Guys, are you good at Maths?

Problem: I have a position in loss, position size $100, x5 leverage, -50% PNL,  Binance.

I want to do DCA, what should be my limit order size so I can cover the current -50% loss?

Thanks