Dollar-Cost Averaging (DCA) is a strategy that involves buying an equal amount of the asset in tokens at regular intervals. It aims to achieve a better average price for the selected trading pair and reduce the impact of market volatility.
What are trading bots?
Trading bots are automated software designed to help users buy and sell cryptocurrencies at predetermined intervals, with the aim of generating profits.
What is a Spot DCA bot?
Binance Spot DCA bot lets you set how much to buy, when to buy, and when to sell. Based on your parameters, it can help you to:
Buy more as the price dips
Sell more as the price increases
In the Buy mode, the bot aims to achieve a lower average buy price by placing more buy orders when the market price falls below your initial trade. This continues until the market price goes above your take-profit percentage, triggering the bot to initiate a sell order. This process is repeated as long as you have sufficient funds in the wallet.
Tip: Choose the Buy mode if your initial investment is in the quote asset (e.g., BNB).
In the Sell mode, the bot aims to achieve a higher average sale price by placing more sell orders when the market price goes above your initial trade. This continues until the market price goes below your take-profit percentage, and the bot will initiate a buy order. This process is repeated as long as you have sufficient funds in your wallet.
Tip: Choose the Sell mode if your initial investment is in the base asset (e.g., BTC).
*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 Auto-Invest, Spot Grid, and Spot DCA
Automate crypto investments to grow your crypto holdings
Make profits on small price changes in volatile markets
Take advantage of market volatility to buy more when the price is low, and sell more when the price is high
Strategy
Automate buy orders with a fixed amount and frequency, similar to dollar-cost averaging
Automate buy and sell orders at preset intervals within a price range (a grid)
Automate buy and sell orders based on price deviation and an order size multiplier, similar to a more advanced dollar-cost averaging
Trading/Orders Rationale
Consistent entry only
Each entry is paired with an individual exit
Multiple entries, single exit
Trading Bot Frequency
1. Time-based, consistent order frequency regardless of the market condition
2. Depends on the recurring cycle you set
1. Price-based, more orders when the market is more volatile
2. Depends on the number of grids you set between the interval upper and lower limits
3. In the arithmetic mode, each grid has an equal price difference
4. In the geometric mode, each grid has an equal price difference ratio
1. Price-based, more orders when the market moves against your initial price
2. Depends on the number of DCA orders triggered by the price deviation percentage
How to set up a Spot DCA trading bot?
1. Log in to your Binance account and click [Trading Bots].
In the list of available trading bots, select [Spot DCA].
If you are using the Binance App, go to [Trade] - [Bots].
In tap [Trading Bots] - select [Spot DCA].
2. You will be then redirected to the Spot DCA trading interface. Select a trading pair, for example, BNB/BTC.
Then, go to the parameter box on the right. Select the [Buy Token A] or [Sell Token A] mode.
Important Note: The token displayed will change depending on the trading pair selected. Since we’re using BNB/BTC as an example, Token A is BNB and you’ll see [Buy BNB] and [Sell BNB].
2.1. If you choose the [Buy Token A] mode, your investment will be in the form of the quote asset (BTC). You’ll need a sufficient BTC balance in your Spot Wallet to create the trading bot.
2.2. If you choose the [Sell Token A] mode, your investment will be in the form of the base asset (BNB). You’ll need a sufficient BNB balance in your Spot Wallet to create the trading bot.
3. Enter a price deviation percentage per order and a take-profit percentage. You may also select [Fix] or [Trailing] for your take-profit percentage.
4. Next, enter your investment amount for both base and DCA order sizes and the number of max DCA orders.
Order settings
Price Deviation: The price difference percentage that triggers DCA orders.
Take Profit: The target profit percentage based on the average price (before each round ends).
[Fix] is selected by default. Once the trading bot reaches the take profit percentage, it will trigger a take-profit order and start a new 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 a sell order and start a new round. Note: [Trailing] may not be available for certain trading pairs.
Base Order: The initial investment amount that will not be exceeded.
DCA Order: The subsequent investment amount(s) that will not be exceeded.
Max DCA: The maximum number of DCA orders that will be placed per round.
Important Note: You may also set up advanced parameters, such as a trigger price, price deviation multiplier, DCA order size multiplier, cooldown between rounds, lower and upper price range, and stop loss.
Advanced settings
Trigger Price: Price of the token that will trigger the trading bot to start.
Price Deviation Multiplier: The Price Deviation Multiplier determines how the price deviation percentage is multiplied for each subsequent DCA (Dollar-Cost Averaging) order after the initial entry.
By default, this parameter equals to 1, which means each additional entry will equal the Price Deviation %.
If the multiplier is set to a value greater than 1, it takes effect from the second DCA entry.
For example, you are on the buy side and open a long position at $30,000 for a BNB/BTC pair, with a Price Deviation of 1% and a Price Deviation Multiplier of 2.
DCA Order Size Multiplier: Multiply the subsequent DCA Order investment amount(s). By default, this parameter equals to 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 worth of BTC, 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 worth of BTC = $1,000
DCA #2 = $1,000 worth of BTC * 2 = $2,000
DCA #3 = $1,000 worth of BTC * 2 * 2 = $4,000
Cooldown between Rounds: Rest period between each round of execution. 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 and end.
5. Check the order details carefully before clicking [Confirm].
How to view your Spot DCA trading bots?
On Binance Website
1. To check your Spot DCA orders and history, go to the [Running] or [History] tab.
2. Click the order icon next to an order to view more details.
3. You’ll be then redirected to the details page. Here you can view your profit, parameters, current DCA round, and trade history.
4. To view your trading bots, go to [Assets]- [Trading Bots].
On Binance App:
Go to the [All Orders] tab on the Spot DCA page and you will be able to see your current and past orders.
1. What is the difference between Spot DCA and Auto-Invest?
While both Spot DCA and Auto-Investare designed to achieve a better average price for the selected token, Spot DCA is a trading bot that helps you buy or sell selected tokens. Auto-Invest only helps you buy the selected token regularly, it does not facilitate the selling of the tokens (i.e., trading).
2. What parameters can I customize in a Spot DCA trading bot?
Spot DCA will transfer assets from your Spot Wallet to your Trading Bots Wallet to support the running of the trading bot.
5. Can I edit or pause my Spot DCA trading bots?
No, you cannot edit or pause your DCA trading bots.
6. Can I end my Spot DCA trading bots before the end date?
Yes, you can end your DCA trading bots anytime. Go to the [Running] tab and click [End] next to the bot to terminate it.
7. What happens when the Spot DCA ends?
All base coins from your open orders will be closed and sold automatically at market price. Once sold, the utilized funds will be unlocked and available for utilization. Your funds will be transferred back to your Spot Wallet.
When you cancel a Spot DCA order manually, you can choose to retain your base asset.
8. How is profit calculated if I manually cancel or close the Spot DCA?
All profits will be settled immediately at market price. Profits will be calculated based on the difference between the average price and market prices without deducting the trading fees.
Spot DCA Profit Types
Total Profit (Total Profit / Total Investment)
[Buy Token] mode
Calculation: (Current Base Asset - Start Base Asset ) * Last Price + (Current Quote Asset - Start Quote Asset)
[Sell Token] mode
Calculation: (Current Base Asset - Start Base Asset ) + (Current Quote Asset - Start Quote Asset ) / Last Price
Total Profit % = Total Profit / Total Investment (2 d.p.) (Regardless of mode)
DCA Profit (Sum of DCA Round Profits)
Unit: Quote Asset for [Buy Token] mode, Base Asset for [Sell Token] mode
Calculation: (Total Take Profit - Fee) - Total DCA Order(s) - Total Base Order
[Sell Token] mode (Unit: Base Asset)
Calculation: (Take Profit Executed - Fee) - DCA Order(s) Executed - Base Order Executed
To view your Spot DCA profit breakdown, please click [Running/History] and then click the details page.
9. Why is my round profit negative despite a take profit order?
Sometimes the Spot DCA’s round profit may not account for all the assets you gained. In some cases, the assets gained during each round may be recorded under floating profit, resulting in a negative round profit.
For example, you bought 0.021 BNB, of which 0.000021 BNB was deducted as a trading fee, so you’ll only get 0.020979 BNB. When you sell the 0.020979 BNB in a take profit order, you could only sell 0.02 BNB as the 0.000979 BNB is too small to be sold (based on the Trading Rules). This remaining 0.000979 BNB will be recorded as floating profit, which may cause your round profit to be negative.
Please note that in the [Buy Token] mode, round profit refers to the quote asset, whereas in the [Sell Token] mode, it refers to the base asset.
10. Why is my Spot DCA terminated or canceled?
Some possible reasons include:
You created too many strategies. Please note that currently you can only create 1 DCA strategy for each trading pair and the maximum number of strategies you can create is 20.
The market price has hit the stop-trigger price you set
The coin in your trading bot is delisted or will be delisted soon
11. What type of order will be placed by the strategy?
The strategy would place limit orders, with the order price set to either the current market price or the trigger price you entered (under advanced settings).
12. Why does a “Close_position” order follow my “Take-profit” order in a round?
When the take-profit order of a round is filled, your remaining assets received from the partially-filled DCA order(s) will also need to be settled.
To clarify, take-profit orders process assets from fully-filled order(s). Therefore, any remaining assets from partially-filled order(s) will be processed by a subsequent close-position order to finalize the round.
For example:
Base order filled: 0.2 BNB
2 DCA orders fully-filled: 0.1 BNB each
1 DCA order partially-filled: 0.05 BNB
[Buy Token]: The take-profit order would sell the total quantity of assets received (0.2 + 0.1 + 0.1 = 0.4 BNB). Once it is filled, the system will place a “Close_position” order to sell the remaining 0.05 BNB.
[Sell Token]: The take-profit order functions similarly when selling a token. Once it buys back a total of 0.4 BNB (0.2 + 0.1 + 0.1), the system will place a “Close_position” order to buy the remaining 0.05 BNB.
*Please note that these examples are provided for illustrative purposes only and do not account for the deduction of trading fees.
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