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Bybit Learn
Beginner
9 сент. 2022 г.

10 Reasons To Invest in Bybit’s DCA Trading Bots

Dollar-Cost-Averaging (DCA) bots are automated trading bots that allow you to automatically buy coins based on a preset investment amount and time intervals within a specific period, thereby reducing the influence of market volatility.

What Is a DCA Trading Bot?

A DCA trading bot is a one-stop platform for automated crypto trading. The bot offers various types of pre-configured parameters with effective trading strategies that save time and improve investment returns at no additional cost.

How Do Bybit’s DCA Trading Bots Work?

Bybit’s DCA trading bots, as their name suggests, are automated trading bots that help you to automatically buy coins. The coins are bought by using a preset investment amount and time intervals within a specific period. Buying coins with this DCA strategy reduces the influence of market volatility, and allows you to maintain a cost price similar to the market average. Bybit allows you to create a DCA bot with one coin, or a portfolio of up to five coins.

Bybit’s DCA trading bots are based on the dollar-cost-averaging strategy, which helps you average the price of your coins by purchasing tokens on a regular basis. DCA trading is suitable for the following investing: HODLing, long-term investment and smile curving.

Here are the parameters for DCA trading bots:

  • Currency: This is the currency used to buy your coins. Bybit supports investing either by USDT or USDC. Note that USDC will only apply to the USDC market; you cannot create a mixed portfolio with ADA/USDT or BTC/USDC, and likewise for USDT.
  • Fixed Investment Amount: This is the amount used to buy the cryptocurrency for each period. The specific minimum/maximum order quantity can be viewed in the Order Zone.

  • Investment Frequency: This is how often you want to invest in a chosen crypto/portfolio. The first investment will be made soon after a DCA bot is created. Regardless of the amount, a longer frequency fits a longer plan. Bybit provides various time interval settings, from a few minutes to a few weeks.
  • Minutes

    Hour(s)

    Day

    Weeks(s)

    Time Interval

    10

    1,4,8,12

    1

    1,2,4

  • Max. investment amount (Optional): This is the maximum amount you wish to invest in this portfolio.
  • Transfer all assets (Optional): The bot will transfer all holding assets to users’ spot account once this option is triggered. This is all about what you want to do with your DCA bot!

Let's see how the DCA bot works by using an example.

  • Coins: BTC and ETH
  • Investment Coin: USDT
  • Investment Frequency: 1 week
  • Total Fixed Investment Amount: 1,000 USDT
    • BTC Fixed Investment Amount: 600 USDT
    • ETH Fixed Investment Amount: 400 USDT
  • Max. investment amount (Optional): 5,500 USDT

Assuming that Trader A invests for five weeks, according to the weekly investment frequency, Trader A automatically performs a total of five transactions. The specific details are as follows:

Purchase 1

Purchase 2

Purchase 3

Purchase 4

Purchase 5

BTC Price (USDT)

29,000

30,000

31,000

32,000

33,000

ETH Price (USDT)

1,400

1,500

1,600

1,700

1,800

Purchase Quantity (BTC)

0.02068966

0.02

0.01935484

0.01875

0.01818182

Purchase Quantity (ETH)

0.28571429

0.26667

0.25

0.23529412

0.2222

Please note that the system will automatically transfer the required amount of funds from your Bybit Spot Account to your Bot Account before each purchase.

During a five-week investment period, the average entry price for BTC and ETH is 31,000 USDT and 1,600 USDT, respectively, based on the following calculations:

  • BTC Avg. Enter Price (USDT): (29,000 + 30,000 + 31,000 + 32,000 + 33,000) / 5

  • ETH Avg. Enter Price (USDT): (1,400 + 1,500 + 1,600 + 1,700 + 1,800) / 5

In this example, Trader A buys 0.09697632 BTC at an average price of 31,000 USDT, and simultaneously buys 1.2598973 ETH at an average price of 1,600 USDT. Since Trader A has set a maximum investment amount of 5,500 USDT, and the remaining 500 USDT isn’t enough to initiate the sixth auto-purchase — as each single investment is 1,000 USDT — the DCA bot will automatically stop after the fifth auto-purchase. At the same time, the BTC and ETH in the DCA bot will be returned to Trader A’s Spot Account.

Assuming that Trader A doesn’t set the Maximum investment amount, and the available balance in the Spot Account isn’t enough for the next auto-purchase, Trader A will receive an email notification to deposit funds into their Spot Account, and the DCA bot will be suspended. Once there are sufficient funds in the Spot Account, the bot will be reactivated at the next auto-purchase interval.

Please note that the suspension of the DCA Bot due to insufficient funds will not automatically close it. If you want to terminate your DCA Bot, please close it manually.

Advantages of Dollar Cost Averaging

Generally, DCA is advantageous to anyone who is bullish on a good asset. It allows you to buy at a low price and reduce your cost if the price declines.

The DCA strategy helps to lower the risk of investing during choppy markets. Based on your market performance when you make a purchase, using DCA can reduce your losses — or even help to increase your profits. It can prevent buying at high prices and sustaining losses for a long time. But as the risk decreases, so will the upside benefits. However, if you’re bullish on an asset and have a long-term time frame to hold it, it’s worth considering dollar cost averaging.

Now, we'll take a look at why you can take advantage of Bybit's DCA trading bots to help you manage your risk and reduce your entry cost.

Why You Should Invest In Bybit’s DCA Trading Bots

1. Simple to Set Up

With the current choppy market conditions, more and more people are finding ways to simplify their investment process. Using the Bybit DCA bot, you can automate your daily, weekly or monthly buys by ensuring you have enough funds in your bot account. You don't need to depend on chart reading or technical analysis to purchase your favorite coins. So why not take advantage of the DCA bot to save time and reduce repetitive work?

2. Easy-to-Use Platform

The DCA bot is designed for anyone to use. Its user interface is straightforward, and beginning traders can use our Auto-Fill function to easily create a trading bot with preset parameters or customized parameters. Advanced users can join our community to receive the latest market analysis and recommended trading strategies.

3. No Costs to Run Bots

Bybit users are allowed to use the DCA bot for free … at no cost. DCA bots incur no additional or hidden fees, and trading fees are based on your VIP status, which is calculated when your orders are filled successfully.

Bybit has a cost-effective fee structure that’s friendly for DCA bot users. Read our guide to Bybit trading fees to find out how the structure works.

4. Various Markets and Crypto Pairs

The DCA bot is supported on the Bybit spot platform for both USDT and USDC markets. Users can choose from a wide variety of coins, including BTC, ETH, BIT and more. Head over to the Order page to view the full list of coins supported by the DCA bot.

5. Removes Personal Emotions

As we know, it can be very emotional to trade every day, watching candles move up and down as prices fluctuate. Bybit's DCA trading bot does this automatically for you in a few easy clicks. By configuring some aspects as shown above, you’ll be able to let the bot invest a specified amount at a regular period of your choice. This removes the emotional aspect of trading, as the bot manages your portfolio. If you run out of funds, Bybit will drop you an email to top up so that the bot can continue buying according to the predetermined parameters.

6. Reduces Repetitive Work

With the current market conditions, more and more people are finding ways to simplify their investment process. Using the Bybit DCA bot, users can automate their daily, weekly or monthly buys by ensuring that they have enough funds in their bot account. You don't need to depend on chart reading or technical analysis to purchase your favorite coins — so why not take advantage of the DCA bot to save time and reduce repetitive work?

7. Simultaneously Create Multiple Bots

Bybit gives users the option to create and run multiple bots at the same time. Currently, you can have up to 50 trading bots simultaneously — for both DCA bots and Spot Grid bots. On top of that, you can also create multiple DCA bots for the same coin of your choice. This provides a lot of flexibility for those who wish to diversify, as there’s an option for you to operate up to 50 different bots, should there be a need.

8. Invest in Smaller Amounts

Instead of investing in large chunks, the DCA bot helps you to do so in small portions over a period of time. It’s important to understand that DCA is a long-term strategy which takes advantage of volatile markets without risking capital. DCA can be an excellent solution for beginning investors, who may be easily discouraged by downturns. It also gives users the time to do deeper research while the DCA bot continues to invest for them.

9. Lower Average Entry Point

With Bybit's DCA bot, users can enter at price levels they might not be able to achieve by trading manually. This is done by setting specific parameters that the DCA bot automatically executes, without the need for you to continuously monitor price fluctuations. The DCA bot allows you to make orders at several low entry points, reducing your overall entry price should the market continue to trend downward. This is very important, especially if you have a long-term goal, as it could increase your profit margins by a significant amount

10. DCA Is Proven to Beat Timing the Market

DCA helps users lower their costs without trying to buy the lowest price. Its hard for people to continuously guess the market tops and bottoms. Instead of timing the market, using a DCA bot helps you to consistently invest in your preferred cryptocurrencies.

Even if the market keeps going down, as long as one uses a DCA bot, the Net Value will eventually be higher than the original investment. The best practice of running a DCA bot is: Select your favorite assets, ensure there are enough funds, run the DCA bot, be patient.

The Bottom Line

Bybit's DCA trading bot is an efficient tool for managing the danger of investing too much money at once. DCA trading is passive and doesn’t include any active management fees. It’s great for people who want to earn income and can afford to add to their investment regularly. If you’re looking for an easy way to buy crypto without stress, this bot is for you! Keen on beginning your DCA journey? Try out Bybit's DCA trading bots today and benefit from our zero fees and highly customizable parameters.

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We hope this Bybit trading bot guide has been useful for you in your pursuit of automated investing and trading. Here's all the facts about our trading bots, summarized in one simple infographic.

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