200% ROI in Five Months With the Bitcoin DCA Bot

The Bitcoin market never fails to surprise with its sharp corrections and swift rebounds, often leaving crypto investors confused by its volatility and causing significant trading losses. But is there a way to protect yourself from this volatility or even profit from it? The answer is the DCA bot by GoodCrypto.

DCA bot is one of the most popular CEX trading tools that automatically averages down and adjusts your Take Profit level when the market moves not in your favor. This way, it increases your chances of turning a profit once the price starts rebounding. 

The DCA bot lets you stop betting on a specific market direction and instead expect that the price will not fall too far without rebounding strongly enough to reach your Take Profit level. This is a perfect tool if you want to protect yourself from, or capitalize on, the market volatility, as well as accumulate long-term holdings in your favorable assets, such as Bitcoin. 

However, a fair question arises: “Does the DCA bot work as effectively in practice as it does on paper?” Let’s find out.

Today, goodcryptoX is going to review one Bitcoin DCA trading case, shared by the GoodCrypto Co-Founder Max, where he managed to achieve over 200% ROI in just five months of DCA trading. 

This blog post summarizes the full video case review on GoodCrypto YouTube channel, so if you prefer watching over reading, feel free to check it out  👇

With that said, let’s dive into the case review.

$BTC DCA Bot Case Review

Let’s start with the most interesting and exciting part - the bot's profitability.

On the screenshot above, you can see that the DCA bot started trading with almost 25 $USDC and ended up with 74 $USDC, which equals almost 200% ROI. And if recalculating into the annual projected yield, this number reaches an impressive 470% APY, which looks like a solid result, don’t you think? 

And even if excluding the leverage used, in this case 10x, for the DCA bot, the APY would still be almost 50%, quite a solid return as well. 

As you can see on the balance chart, over the five months of operating, the bot has made a few large dips, which were mainly caused by heavy $BTC corrections, leading to temporary unrealized losses in the bot’s positions. However, as the price of Bitcoin climbed back up, the total account balance recovered and even went higher than it was before.

This situation with balance changes in DCA bots occurs quite often, which is why it is recommended to always have a little more than enough funds in your account in case any unexpected market correction occurs. This will help you “survive” the market dip without liquidation and potentially turn it into a profit if the price rebounds enough.

Now, let’s take a look at the bot’s exact settings 👇

Here’s a look at the exact setup used:

• Trading pair: Perp BTC/USDT;
• Leverage: 10x;
• Entry order type: buy market order;
• Funds required: 85 $USDC;
• Entry order size: 0.0001 $BTC (~8.83 $USDC);
• Number of avg. orders: 10;
• 1st avg. order size: 0.0001 $BTC (~8.83 $USDC);
• 1st avg. order price step: 1.1%;
• Avg. order size multiplier: 1.5x;
• Avg. orders price step: 1.2%;
• Avg. orders price step multiplier: 1.2x;
• TP order: limit order, 1% from the VWAP;
• SL order: 3% from the last av. order.

To run this bot, simply connect your exchange account to the GoodCrypto app using API keys, copy the settings, and click “Launch”!

This setup was designed to cover nearly 23% of the potential price drop. In other words, Max was betting that Bitcoin’s price wouldn’t decline by more than 25% without bouncing back enough to hit his take-profit (1% bounce back). However, if you're unsure whether the price range is too tight or too wide, or simply want to experiment with the settings for potentially greater profitability, here are a few suggestions that might help 👇

Tips to Improve Your DCA Bot Setup 

#1: Averaging Orders’ Size Multiplier 

First, and the most powerful lever you can pull is to adjust the averaging orders’ size multiplier for your bot. When increasing your averaging orders’ size multiplier, you allow the bot to average down your position more effectively. This brings the average entry price closer to the current market price and improves your chances of hitting the take-profit target.

What’s more, the size multiplier also influences the distance between your Take Profit order and the market price at the time of each averaging order execution. In the GoodCrypto app, this distance can be found below the take profit row, which is set to help you understand the chances of your Take Profit order being triggered during the market retracements.

Therefore, by increasing the order size multiplier, you give yourself the option to raise your Take Profit size and capture more returns with each profitable bot iteration. For example, if you set the averaging order size multiplier to 2x instead of 1.5x, you can confidently aim for a 1.5% or even 2% take-profit target, compared to the initial 1%. Why? 

Because the higher Take Profit size is now compensated by the more effective average down of your position, thanks to the increased averaging orders’ size multiplier. As a result, you may end up with a more profitable setup, without increasing your risk.

However, with the benefits of changing the averaging orders’ size multiplier, there also come the tradeoffs. Even a small increase in that number would require you to invest much more in funds. For example, the old bot setup would need around 85 $USDC, but if the multiplier rises even to 2x, the funds required would rise almost tenfold, to over 737 $USDC. 

#2: Trailing Stop for Entry Order

Another improvement that would sit perfectly in this setup is the implementation of a trailing stop order as an entry order. The trailing order will ensure that you won’t get into the market when the price of Bitcoin is actively falling and help find a better entry for your bot. It is recommended for you to set a tight (0.7% - 0.8%) trailing distance for the order, considering Bitcoin’s relatively low volatility.

Finally, the bot could have used more averaging orders than in the initial setup. Why? To cover a wider range of potential Bitcoin price drops. For example, with the initial setup, 10 averaging orders covered roughly 23% of the potential price range. 👇

However, already with 12 averaging orders, the potential price drop range your bot will cover rises by nearly half, to almost 36%. This adds an extra layer of safety and robustness to your setup, especially if you're concerned about increased Bitcoin volatility in the future.

But, same as with the averaging orders’ size multiplier, this action would increase your demand for funds drastically. For instance, the funds needed for 10 averaging orders with a size multiplier of two were 737 $USDC, but once that number increases to 12, the funds needed rise to over 2600 $USDC. Quite a lot of money, huh? 

Conclusion

To sum up, the DCA trading bot is a powerful tool that can not only protect you from market volatility but also help you earn more, outperforming a simple HODL strategy. Today’s case is proof: an impressive 470% APY on Bitcoin trading. 

However, as powerful as this tool is, the more understanding of its core mechanics you need, that’s why it is better to start with less risky setups, even though it would be less profitable, and then gradually increase the risk. What’s more, to master the DCA bot faster, you can also follow Max’s Telegram channel, “DCA Tips from GoodCrypto,” and the GoodCrypto YouTube channel for more case studies, detailed breakdowns, and setup ideas.

Good luck and may the profits be with you! 🍀