DCA LONG and DCA SHORT
What is the DCA Strategy?
DCA (dollar-cost averaging) in Bybot can run in two spot directions:
- DCA LONG buys more as the price drops, lowers the average purchase price, and sells the accumulated position after a recovery.
- DCA SHORT sells a base asset already held in your exchange account as the price rises and buys it back lower. It does not use margin, borrowed coins, or leverage.
For LONG, in simple terms: instead of buying once and waiting for growth, the bot buys more if the price has dropped. Thanks to this, the average purchase price becomes lower, and the price doesn’t need to return to the original level for profit.
| Direction | Entry / DCA side | Close side | Required balance |
|---|---|---|---|
| DCA LONG | Buy | Sell | Quote currency, such as USDT or USDC |
| DCA SHORT | Sell | Buy back | Base asset already held on the exchange |
How DCA LONG Works in Practice
LONG example: let’s say the bot bought 1 BTC for $10,000.
The price dropped to $9,000 — the bot bought another 1 BTC.
Now the bot has 2 BTC, and the average purchase price is:
(10,000 + 9,000) / 2 = $9,500
The price rose to $9,700 — the bot sells both BTC.
Result:
- Spent: 10,000 + 9,000 = $19,000
- Received: 9,700 × 2 = $19,400
- Profit: $400
Without averaging, you would have had to wait for the price to return to $10,000. But with averaging, the bot earned already at $9,700.
How DCA SHORT Works in Practice
Suppose your exchange balance already holds 2 BTC. The bot sells 1 BTC at $10,000, then sells another 1 BTC after the price rises to $11,000. The average sale price is $10,500.
When the price falls to $10,200, the bot buys back 2 BTC:
- Received from sales: 10,000 + 11,000 = $21,000
- Spent on the buyback: 10,200 × 2 = $20,400
- Difference before exchange fees: $600
The BTC amount on the balance is restored after the buyback. The asset must be held in the exchange account before the bot starts.
Strategy Parameters
When creating a bot with a DCA strategy, you configure the following parameters:
The detailed examples below use LONG. For SHORT, the direction is reversed: the bot sells the base asset at higher levels and closes the cycle by buying it back lower.
1. Order Size
The size of the first order. LONG buys with quote currency, while SHORT sells the base asset.
Example in dollars: order size — 10 USDT. The bot will start a cycle by buying the asset for 10 USDT.
Example in coins: order size — 0.001 BTC. The bot will buy exactly 0.001 BTC.
2. Profit per Trade
The target profit at which the bot closes the accumulated position.
Example: profit — 0.5 USDT. In a LONG cycle, the bot will sell all purchased coins once the total profit on the position reaches 0.5 USDT.
3. Step Between DCA Levels (%)
How far the price must move before the bot places the next averaging order. LONG levels are below the initial price; SHORT levels are above it.
Example: step — 3%, initial price — $100.
- 1st purchase: $100
- 2nd purchase: $97 (3% drop)
- 3rd purchase: $94.09 (another 3% from $97)
- 4th purchase: $91.27 (another 3% from $94.09)
4. Step Multiplier
Increases the distance between DCA levels with each subsequent order. The example below uses LONG.
Example: initial step — 3%, multiplier — 1.5.
- 1st step: 3%
- 2nd step: 4.5% (3% × 1.5)
- 3rd step: 6.75% (4.5% × 1.5)
With an initial price of $100:
- 1st purchase: $100
- 2nd purchase: $97 (−3%)
- 3rd purchase: $92.64 (−4.5% from $97)
- 4th purchase: $86.38 (−6.75% from $92.64)
The stronger the drop — the greater the distance between purchases. The budget is spent more economically.
5. Volume Multiplier
Increases the size of each subsequent averaging order. The example below uses LONG, where the bot buys more at lower prices.
Example: first purchase — $10, multiplier — 1.5.
- 1st purchase: $10
- 2nd purchase: $15 ($10 × 1.5)
- 3rd purchase: $22.50 ($15 × 1.5)
- 4th purchase: $33.75 ($22.50 × 1.5)
At lower prices, the bot buys more — this further reduces the average price and speeds up reaching profit.
6. Maximum Number of Orders
How many averaging orders the bot can place. LONG buys as the price falls; SHORT sells as it rises.
Example: with 5 orders, the bot will make the first purchase and can buy 4 more times as the price continues to drop. With 10 orders — it can buy up to 9 more times, but more funds are needed on the balance.
7. Auto Cycle Reset
This setting is available for DCA LONG. When enabled, the bot automatically resets the current DCA cycle after reaching the maximum number of averaging orders.
DCA SHORT does not use auto-reset. The SHORT bot still places the sell and buyback orders defined by the strategy automatically after launch.
8. Operating Range (optional)
You can limit the price range in which the bot places orders. The bot will only start working when the price is within this range.
Example: you only want to buy the asset if its price is between $90 and $110. The bot will not open positions if the price is above $110 or below $90.
Budget Table
When creating a bot with a DCA strategy, the app will show you a budget table — a detailed plan of all averaging levels. For LONG, funding is shown in quote currency. For SHORT, funding is shown in the base asset.
The table below is a LONG example:
In the table, you will see:
| Level | Buy Price | Purchase Amount | Total Budget |
|---|---|---|---|
| 1 | $100 | $10 | $10 |
| 2 | $97 | $15 | $25 |
| 3 | $92.64 | $22.50 | $47.50 |
| 4 | $86.38 | $33.75 | $81.25 |
The table helps you understand in advance:
- how much money you need on the exchange for the bot to complete all levels
- at what prices the bot will place orders
- what the size of each order will be
Make sure the balance can cover all levels: quote currency for LONG or the base asset for SHORT.
When Is DCA LONG Suitable?
DCA LONG works best under the following conditions:
Ideal conditions:
- Volatile market — the price fluctuates frequently, with short-term drops followed by recovery
- Promising asset — you believe the asset will grow in the long term, or at least not lose its value
- Short-term dips — the price drops temporarily and then recovers. The DCA bot earns best on these kinds of movements
Not suitable if:
- The asset is in a prolonged decline with no signs of recovery
- You have a limited budget insufficient to cover all averaging levels
Important to understand the risks:
- In LONG, during a prolonged decline, the bot keeps buying more. If the decline continues, losses on the position will grow.
- In SHORT, during a prolonged rise, the bot sells the base asset at the next levels. If the price does not fall, the buyback may be delayed and restoring the asset amount may cost more.
- If the budget runs out, the bot cannot place the next averaging order.
- It is recommended to calculate the required budget in advance using the budget table when creating the bot. Make sure you have enough funds on the exchange to cover all levels.
When Is DCA SHORT Suitable?
DCA SHORT is designed for an asset already held in your spot balance when you expect a rise followed by a pullback. The bot sells the asset in portions as the price rises and aims to buy the sold amount back lower.
The balance must hold enough base asset to cover every configured level. If the price keeps rising without a pullback, closing the cycle can take longer.