Dollar cost averaging trading system (DCA)

2022年8月22日

As investors, we often face the dilemma of willing high stock prices when we sell, but not when we buy. There are times when this dilemma causes investors to wait for a dip in prices, thereby potentially missing out on a continual rise. This is how investors get lured away from the markets and become tangled in the slippery slope of market timing, which is not advisable to a long-term investment strategy.

Skyrex developed a complex trading system based on dollar-cost averaging in Quick Fingers Luc's interpretation. It is a combinations of strategies which allows to systematically accumulate assets by investing scaled amounts of money at defined market cycle global support levels. Dollar-cost averaging can reduce the overall impact of price volatility and lower the average cost per asset thus even during market slumps only a small bounce is required to reach take profit.

The strategy script monitors a chart price action and identifies bases as they form. When bases are reached the script provides entry actions. During price action development an asset value can go lower and in this way the script will perform safety entries at each subsequent accumulation levels. When weighted average entry price reaches target profit the script will perform a take profit action.

Bases are identified as pivot lows in a fractal pattern and validated by an adjustable decrease/rise percentage to ensure significancy of identified bases. To qualify a pivot low, the indicator will perform the following validation:

• Validate the price rate of change on drops and bounces is above a given threshold amount.
  
• Validate the volume at the low pivot point is above the volume moving average (using a given length).
  
• Validate the volume amount is a given factor of magnitude above is above the volume moving average.
  
• Validate the potential new base is not too close to the previous range by using a given price percent difference threshold amount.
  

A fractal pattern is a recurring pattern on a price chart that can predict reversals among larger, more chaotic price movements.
These basic fractals are composed of five or more bars. The rules for identifying fractals are as follows:

• A bearish turning point occurs when there is a pattern with the highest high in the middle and two lower highs on each side.
  
• A bullish turning point occurs when there is a pattern with the lowest low in the middle and two higher lows on each side.
  

Basic dollar-cost averaging approach is enhances by implementation of adjustable accumulation levels in order to provide opportunity of setting them at defined global support levels and Martingale volume coefficient to increase averaging effect. According to Quick Fingers Luc's principles trading principles we added volume validation of a base because it allows to confirm that the market is resistant to further price decrease.

The strategy supports traditional and cryptocurrency spot, futures, options and marginal trading exchanges. It works accurately with BTC, USD, USDT, ETH and BNB quote currencies. Best to use with 1H timeframe charts and limit orders. The strategy can be and should be configured for each particular asset according to its global support and resistance levels and price action cycles. You can modify levels and risk management settings to receive better performance

Advantages of this script:

• Strategy has high net profit of 255% at backtests
  
• Backtests show high accuracy around 75%
  
• Low Drawdowns of around 14% at backtests
  
• Strategy is sustainable to market slumps and can be used for long-term trading
  
• The strategy provides a large number of entries which is good for diversification
  
• Can be applied to any market and quote currency
  
• Easy to configure user interface settings
  
  How to use?
  1. Apply strategy to a trading pair your are interested in using 1H timeframe chart
  2. Configure the strategy: change layer values, order size multiple and take profit/stop loss values according to current market cycle stage
  3. Set up a TradingView alert to trigger when strategy conditions are met
  4. Strategy will send alerts when to enter and when to exit positions which can be applied to your portfolio using external trading platforms
  5. Update settings once market conditions are changed using backtests on a monthly period

2023年7月31日

版本注释

We're excited to share that we've updated our strategy script on TradingView. This update incorporates a transition from Pine Script 4 to Pine Script 5, enhancing the overall strategy's performance, accuracy, and interpretation speed.

Our strategy script is based on the complex trading system developed by Skyrex, which employs a sophisticated dollar-cost averaging approach, as interpreted by Quick Fingers Luc.

Key Highlights:

• Dynamic Scaling: This update brings dynamic scaling to enhance the interpretation speed of layers, which increases the script's overall performance.
  
• Increased Accuracy: With the update to Pine Script 5, you can anticipate a boost in the strategy's precision.
  
• Improved Performance: The transition to Pine Script 5 also improves the script's speed and overall performance.