What Is Spot DCA and How Does It Work

What is a Spot DCA bot?

Dollar-Cost Averaging (DCA) is a strategy that involves buying and selling an equal amount of assets regularly at different price points. It aims to achieve a better average price for the selected trading pair and reduce the impact of market volatility.

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You can use Binance’s Spot DCA feature to automatically buy or sell a fixed amount of assets at a designated price deviation at a desired frequency.

Differences between Spot Grid and Spot DCA

How to set up a Spot DCA bot?

1. Log in to your Binance account and click [Trade] – [Trading Bots].

Click [Spot DCA].

If you are using the Binance App, go to [Trade] and tap [Trading Bots] – [Spot DCA].

2. You will be redirected to the Spot DCA trading interface. Select a trading pair, for example, BTC/USDT.

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Then, go to the parameter box on the right. Select the [Buy Token A] or [Sell Token A] mode.

Note: The token displayed will change depending on the trading pair selected. Since we’re using BTC/USDT as an example, Token A is BTC and you’ll see [Buy BTC] and [Sell BTC].

2.1. If you choose the [Buy Token A] mode, your investment will be in the form of the quote asset (USDT). You’ll need a sufficient USDT balance in your Spot Wallet to create the trading bot.

2.2. If you choose the [Sell Token A] mode, your investment will be in the form of the base asset (BTC). You’ll need a sufficient BTC balance in your Spot Wallet to create the trading bot.

3. Enter a price deviation percentage per order and a take-profit percentage. You may also select fix or trailing for your take-profit percentage.

4. Next, enter your investment amount for both base and DCA order and the number of max DCA orders. Click [Create].

Order settings

  • Price Deviation: The price difference percentage that triggers DCA orders.
  • Take Profit: The target profit percentage based on the average price (before the trading bot ends).
    • [Fix] is selected by default. Once the trading bot reaches the take profit percentage, it will trigger a sell order and the trading bot will end.
    • If you select [Trailing], it will lock the profit by enabling the trading bot to remain open and continue to profit as long as the price moves in the selected direction and mode. When the trading bot moves in the opposite direction by a specific percentage, it will trigger a sell order and the trading bot will end. Note: [Trailing] may not be available for certain trading pairs.

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  • Base Order: The initial investment amount that will not be exceeded.
  • DCA Order: The subsequent investment amount(s) that will not be exceeded.
  • Max DCA: The maximum number of DCA orders that will be placed per round.

Note: You may also set up advanced parameters, such as a trigger price, price deviation multiplier, DCA order size multiplier, cooldown between rounds, lower and upper price range, and stop loss.

Advanced settings

  • Trigger Price: Price of the token that will trigger the trading bot to stop.
  • Price Deviation Multiplier: Multiply the price difference in the percentage at which DCA orders will be placed starting from the second entry. By default, this parameter equals to 1, which means each additional entry will equal the Price Deviation %. Otherwise, the multiplier will take effect between each additional entry. For example, you are on the buy side and open a long position at $30,000 for a BTC/USDT pair, with a Price Deviation of 1% and a Price Deviation Multiplier of 2.
    • Base Order = $30,000
    • DCA #1 = Base Order – 1% = $29,700
    • DCA #2 = DCA #1 – 1% * 2 = $29,106
    • DCA #3 = DCA #2 – 1% * 2 * 2 = $27,941.76
  • DCA Order Size Multiplier: Multiply the subsequent DCA Order investment amount(s). By default, this parameter equals to 1, which means each additional entry will equal the DCA Order amount. Otherwise, the multiplier will take effect from the second DCA order onwards (The first DCA order remains default after the bot has started).
    For example, your DCA order is 1,000 USDT, and your DCA Order Size Multiplier is set to 2. When the price reaches the designated price deviation, each additional entry will be multiplied.
    • DCA #1 = 1,000 USDT = 1,000 USDT
    • DCA #2 = 1,000 USDT * 2 = 2,000 USDT
    • DCA #3 = 1,000 USDT * 2 * 2 = 4,000 USDT
  • DCA Order Size Multiplier: Multiply the subsequent investment amount.
  • Cooldown between Rounds: Rest period between each round of execution. By default, the cooldown between rounds is 60 seconds.
  • Lower and Upper Price Range: A price range of the selected token’s base order that the trading bot will only execute within. Note: For successive rounds, the base order executed may deviate from the price range due to market volatility.

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  • Stop-Loss: A stop-loss percentage that triggers the trading bot to stop and end.

5. Check the order details carefully before clicking [Confirm].

6. To check your Spot DCA orders and history, go to the [Running] or [History] tab.

Click the order icon next to an order to view more details.

You’ll be redirected to the details page. Here you can view your profit, parameters, current DCA round, and trade history.

7. To view your trading bots, go to [Wallet] – [Overview] and click [Trading Bots Wallet].

Frequently Asked Questions

1. What is the difference between Spot DCA and Auto-Invest?
While both Spot DCA and Auto-Invest are designed to achieve a better average price for the selected token, Spot DCA is a trading bot that helps you buy or sell selected tokens. Auto-Invest only helps you buy the selected token regularly, it does not facilitate the selling of the tokens (i.e., trading).

2. What parameters can I customize in Spot DCA?

For more details, please visit Binance Spot DCA Parameters.

3. How are fees calculated?

Spot DCA follows the spot trading fee rates. There are no additional fees. For BNB fee deduction history, please visit [Fees Return History].

4. Which wallet does Spot DCA use?

Spot DCA will transfer assets from your Spot Wallet to your Trading Bots Wallet to support the running of the trading bot.

5. What happens when the Spot DCA ends?

All base coins from your open orders will be closed and sold automatically at market price. Once sold, the utilized funds will be unlocked and available for utilization. Your funds will be transferred back to your Spot Wallet.

6. How is profit calculated if I manually cancel or close the Spot DCA?

All profits will be settled immediately at market price. Profits will be calculated based on the difference between the average price and market prices without deducting the trading fees.

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Spot DCA Profit Types

To view your Spot DCA profit breakdown, go to the details page.

7. Why is my round profit negative despite a take profit order?

Sometimes the Spot DCA’s round profit may not account for all the assets you gained. In some cases, the assets gained during each round may be recorded under floating profit, resulting in a negative round profit.

For example, you bought 0.021 BNB, of which 0.000021 BNB was deducted as trading fee, so you’ll only get 0.020979 BNB. When you sell the 0.020979 BNB in a take profit order, you could only sell 0.02 BNB as the 0.000979 BNB is too small to be sold (based on the Trading Rules). This remaining 0.000979 BNB will be recorded as floating profit, which may cause your round profit to be negative.

Please note that in the [Buy Token] mode, the round profit refers to the base asset; in the [Sell Token] mode, it refers to the quote asset.

8. Why is my Spot DCA terminated or canceled?

Some possible reasons include:

  • You created too many strategies. Please note that currently you can only create 1 DCA strategy for each trading pair and the maximum number of strategies you can create is 20;
  • The market price has hit the stop-trigger price you set;
  • The coin in your trading bot is delisted or will be delisted soon;
  • The product is no longer available in your region;

9. What type of order will be placed by the strategy?

It would place limit orders. The limit order price will either be the current market price or the trigger price you entered (under advanced settings).

10. What will happen when my Spot DCA order ends?

In most cases, your base asset will be sold automatically and returned to your Spot Wallet with the remaining quote asset.

When you cancel a Spot DCA order manually, you can choose to retain your base asset.

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