Published in


Mizar | Handling Bear Markets with DCA Bots

Why DCAing is a good strategy in bear markets

Mizar branded banner titled Handling Bear Markets with DCA Bots.

Wait it Out or Panic Sell? Handling bear markets with DCA bots.

So the market has been red — and you have some deals sitting there that you’re worried about. You suddenly get the urge to have a new deal open and close, but you don’t want to tie up more capital. Should you market sell now and just restart? Well, let’s discuss that.

Purpose of the strategy

The biggest thing to remember is that in order to understand how good — or bad — a strategy is doing, you have to understand the purpose of the strategy. If we’re talking DCA bots, then the strategy is to buy in more when the price goes down in order to average out our entry and get the deal closed faster and for more profit.

So, when we have big red positions that’s not necessarily a bad thing, or at least, it’s not as bad of a position to be in if you didn’t have a DCA strategy from the start.

In essence — Relax. Our natural inclination when we see a big red deal is to think “that’s bad” — but from a DCA perspective it’s less an issue and more an opportunity.

To Panic Sell or not?

Back to the main question: Should we Panic Sell some of these red deals? Well usually no.

As we established earlier: a DCA strategy is intended to buy in as the price drops, leading to a bigger close and more profit in the long run. Panic closing when we have a big red bag is doing the opposite and will lead to a net loss, in the long run, most of the time as you are closing deals that have the maximum volume at a high loss, in order to get small volume deals closing at a small gain.

This means that we’re maximizing our risk (losses) and minimizing our reward (gains) by panic-selling DCA strategies at the bottom.

But what’s the alternative? As mentioned in our previous articles — it’s important to have a diverse portfolio and equally important to not have market exposure for your entire portfolio at any one time. If we set ourselves up to succeed early then we can use free capital at times like this — and edit the individual deals to increase the maximum number of Safety Orders, allowing us to average out the buy price by even larger amounts and get the deals closed quicker. As deals close more capital will be freed up, at which point you can let the bot open new deals or continue to increase the number of maximum SO’s on the open deals until they close out.

A second option is to leave the deals we have as is, and use the fresh capital to increase the number of active deals the bot can run. This will allow us to start opening new deals and make some more profit while the old deals close.

But what if we’ve thrown caution to the wind and are fully tied up in the DCA deals? Well the best option is almost always to wait it out — it’s tough and you’ll want to be active on the market as it rebounds, but you’re overexposed as is.

The markets are always evolving so feel free to join the free bot telegram channel for daily discussion on all aspects of BPT bot trading & register with MIZAR to automate your trading and get back your time.

Make sure to follow BPT’s Social Channels as well!
Twitter: https://twitter.com/blockpartytrade
Website: https://www.blockpartytrading.com
Telegram: https://t.me/BPTbotchat

Join Mizar Today!

Help us build the crypto trading platform you want to use.

Mizar is a next-gen trading platform where traders can search for strategies to securely allocate capital or get access to a wide range of trading tools to put their assets in motion. Mizar makes trading simpler and more accessible to everyone, subscription-free.

Be an active part of the MIZAR crypto trading community.
Sign up here or visit mizar.com

Discord | Telegram | Telegram Announcements | Twitter | Website | Medium | Youtube



Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store