The Dollar-Cost-Averaging (DCA) bots are automated trading bots to help traders build positions incrementally. Bybit’s DCA bots 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.
The DCA bots are based on the Dollar-Cost-Averaging strategy, which is an investment strategy that helps you average the price of your coins by investing in a certain number of them on a regular basis.
Since you’ll be investing at regular intervals, DCA bots are suitable for most investors. Especially if you are a:
- Long-term holder of coins
- Long-term investor, and you don't care much about short-term coin price fluctuations
- An investor who can’t keep an eye on the market all the time
How does the Bybit DCA bot work?
Bybit allows you to create a DCA bot with one coin or a portfolio of up to five coins. Let's see how the DCA bot works by using an example.
Before learning more about DCA trading, let's briefly understand some parameters of the DCA bot order page to make it easier for you to understand the following example.
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How to Get Started with DCA Trading on Bybit
Example 1
Suppose Trader A sets up a DCA bot with the following parameters:
- Currency: USDT
- Select Cryptocurrencies: BTC and MNT
- Investment Frequency: 1 week
- Total Fixed Investment Amount: 100 USDT
- BTC Fixed Investment Amount: 50 USDT
- ETH Fixed Investment Amount: 50 USDT
- Flexible Saving: ON
- Max. investment amount for DCA bot (Optional): 2,000 USDT
Assuming that Trader A invests for five weeks and terminates the bot, according to the weekly investment frequency, Trader A automatically performs a total of five transactions. The specific details are as follows:
Accumulated Quantity for BTC
Accumulated Quantity for MNT
Please note that the system will automatically transfer the required amount of funds from your Bybit Funding account to the Trading Bot before each purchase.
During a five-week investment period, the average entry prices for both BTC and MNT can be calculated using the following formula:
Formula
Avg. Entry Price = Accumulated Purchased Value in Quote Token ÷ Accumulated Purchased Amount of Base Token
BTC Avg. Entry Price (USDT) = (50 × 5) ÷ 0.0036934
= 68,688.31 USDT
MNT Avg. Entry Price (USDT) = (50 × 5) ÷ 363.4149
= 0.6879 USDT
In this case, Trader A buys 0.0036934 BTC at an average price of 68,688.31 USDT, and simultaneously buys 363.4149 MNT at an average price of 0.6879 USDT.
As Trader A has also enabled the Flexible Saving feature, the BTC and MNT invested in each round will be automatically allocated to Flexible Saving to earn additional yield.
Note: If the investment amount does not meet the minimum subscription requirement for Flexible Saving, the amount will not be allocated to Flexible Saving.
Benefits
Example 2
If Trader A does not invest in batches through the DCA bot and instead buys BTC and MNT in one go with 500 USDT in the first week, the entry price and purchase quantity are as follows:
- BTC Fixed Investment Amount: 250 USDT
- MNT Fixed Investment Amount: 250 USDT
From the above two examples, for the same investment amount, the DCA Bot allows users to accumulate more BTC and MNT. This comparison also excludes any additional yield that may be earned from Flexible Saving.
Note: If Trader A has set a max. investment amount of 520 USDT. Since the remaining 20 USDT won’t be enough to initiate the sixth auto-purchase — that is, each single investment is 100 USDT — the DCA bot will automatically close after the fifth auto-purchase. At the same time, 0.0036934 BTC and 363.4149 MNT (before considering the yields earned from Flexible Saving) in Trader A’s DCA Bot will be returned to his Funding Account.
Assuming that Trader A does not set the Maximum Investment Amount and the available balance in the Funding Account is not enough for the next auto-purchase, Trader A will receive an email and notification to remind him to deposit funds into his Funding Account.
If Trader A fails to deposit sufficient funds in time for the next auto-purchase, the DCA bot will be suspended. And after there are sufficient funds in the Funding Account, it will be activated again at the next auto-purchase time.
Please note that the suspension of DCA bot due to insufficient funds will not automatically terminate it. If you want to terminate your DCA bot, please close it manually.