What Is Futures DCA and How Does It Work?

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What is Futures DCA?

The Futures Dollar-Cost Averaging (DCA) is an investment strategy that gradually increases losing positions according to predefined parameters. This approach can potentially result in users achieving a more favorable average entry price if the market moves unfavorably after the initial trade and subsequently recovers, but can result in substantial loss if the market continues to fall. The strategy automatically closes the position if the predetermined Take Profit Target is reached.

What is a Futures DCA bot?

Binance Futures DCA bot is an automated trading bot that applies a form of Dollar-Cost Averaging (DCA) strategy, where you increase your position size at pre-determined percentage changes in market price. Based on your parameters, depending on whether you have a long or short position, the bot:

Long position

• Aims to achieve a lower average entry price by continually increasing your position as the market price falls below your initial trade. If the market recovers and the market price eventually goes above your Take Profit Target, the bot will close the position. This process is repeated as long as you have sufficient funds in the Futures DCA Bot Account and subject to your selected parameters. If the market price continues to fall, your loss could be infinite if you have not implemented a Stop Condition or Stop Loss.

Short position

• Aims to achieve a higher average entry price by continually increasing your position as the market price goes above your initial trade. If the market recovers and the market price eventually goes below your Take Profit Target, the bot will close the position. This process is repeated as long as you have sufficient funds in the Futures DCA Bot Account and subject to your selected parameters. If the market price continues to rise, your loss could be infinite, if you have not implemented a Stop Condition or Stop Loss.

How to set up a Futures DCA bot?

1. Log in to your Binance account and access trading bots.

On the Binance Website

1. Click on [Trade] - [Trading Bots].

2. Expand the list of available trading bots and select [Futures DCA].

On the Binance App

1. Go to [Futures] - [Bots] - [Futures DCA].

2. On the Futures DCA trading interface, select a Futures trading pair.

3. Price Settings: Set the Price Deviation and Take Profit Target.

• Price Deviation: Price percentage difference between the first DCA order and the Base order.
• Take Profit Target: The predefined profit target (%) that must be reached for each individual DCA round before the bot closes that specific position.
  • Long position: Take Profit ROI = Take Profit price / Average Price – 1
  • Short position: Take Profit ROI = 1 – Take Profit price / Average Price

4. Investment: Select your preferred leverage, then enter your investment margin amount for both the Base order and the DCA order, along with the maximum number of DCA orders. Please note: The actual number executed may depend on your margin situation.

• Base Order Margin: The initial margin reserved for the Base order when each round starts.
• DCA Order Margin: The pre-allocated margin for subsequent DCA orders after the Base order.
• Max DCA Orders: The maximum number of DCA orders allowed per round is set to 50. However, the actual number of orders placed may be lower if your margin balance is insufficient.

5. Auto-add Margin (optional): You can turn on Auto-add Margin and set a limit on how much margin can be transferred.

When enabled, the Auto-add Margin feature will automatically transfer funds to prevent forced liquidation when the margin ratio reaches a high-risk threshold. For users in non-portfolio margin mode, the margin is transferred from your Spot or USDⓈ-M Futures Account, while for those using portfolio margin, it is transferred from your Spot Account. 

Please note: This may affect other positions in your USDⓈ-M Account and liquidation may still occur.

6. Advanced Settings (Optional):

• Start Condition: 
  • Instant: Places the Base order immediately upon bot creation and starts the next round after the Take Profit Target is reached.
  • Start Condition Trigger Price: Delays placing the Base order until a specified Start Condition trigger price is reached.

• DCA order details:
  • Price Deviation Multiplier: Adjusts the price gap between DCA orders
    • Applied to the Price Deviation for placing the next DCA order. It increases or decreases the price gap between DCA orders. For example, with a Price Deviation = 1%, Price Deviation Multiplier = 2. DCA orders will be placed when the price changes:
      • DCA#1 price change  1% = (0 + 1 × 2^0)%
      • DCA#2 price change  3% = (1 + 1 × 2^1)%
      • DCA#3 price change  7% = (3 + 1 × 2^2)%
      • …
  • DCA Order Amount Multiplier: Adjusts the investment amount for each succeeding DCA order.
    • Applied to the investment amount for placing the next DCA order. For example, with a DCA#1 order amount = 100 USDT, DCA Order Amount Multiplier = 2. Other DCA orders will be placed with amount:
      • DCA#1 Amount 100 = (2^0 × 100)
      • DCA#2 Amount 200 = (2^1 × 100)
      • DCA#3 Amount 400 = (2^2 × 100)
      • …

A larger DCA Order Size Multiplier will result in more significant losses if the market price continues to move against you. 

• Stop Condition:
  • End after this round: End the bot once the first round ends.
  • Stop Condition trigger price: End the bot once the last price reaches a specified Stop Condition trigger price.
• Stop Loss: 
  The set Stop Loss target is calculated based on the initial order execution price of each round after the strategy starts running. Once the stop loss price is triggered, your bot will terminate.
  Examples: For Long DCA Strategy with a Stop Loss target set at 50%: If the initial order execution price in the first round is 100, the stop loss price for the first trading cycle is 100 * (1 - 50%) = 50. If the initial order execution price in the second round is 120, the stop loss price for the second trading cycle becomes 120 * (1 - 50%) = 60.
  For Short DCA Strategy with a Stop Loss target set at 50%: If the initial order execution price in the first round is 100, the stop loss price for the first trading cycle is 100 * (1 + 50%) = 150. If the initial order execution price in the second round is 120, the stop loss price for the second trading cycle becomes 120 * (1 + 50%) = 180.
  • For Long positions, Stop Loss price = Initial order filled price of current round * (1 – Stop Loss %);
  • For Short positions, Stop Loss price = Initial order filled price of current round * (1 + Stop Loss %);
  • When the Stop Loss price has been triggered, the bot will stop.

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

How to view your Futures DCA bots?

On the Binance Website

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

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

3. To view your trading bots, go to [Assets] - [Trading Bots] - [Futures DCA].

On the Binance App

Go to the [All Orders] tab on the Futures DCA page to view your current and past orders.

Disclaimer: The risks of utilizing Futures DCA include the possibility of unlimited losses if the market continues to move against you and you have not set a Stop Condition or Stop Loss. You are solely responsible for your investment decisions, including the parameters on your Futures DCA settings (including the Price Deviation Multiplier, DCA Order Size Multiplier, Stop Condition and Stop Loss) and Binance is not liable for any losses you may incur. Use of Futures DCA involves futures trading, which is subject to high market risk and all of your margin balance may be liquidated in the event of adverse price movement. The value of your investment may go down or up and you may not get back the amount invested. You should only invest in products you are familiar with and where you understand the risks. You should carefully consider your investment experience, financial situation, investment objectives and risk tolerance and consult an independent financial adviser prior to making any investment. Content on our platform does not contain advice or recommendations. This material should not be construed as financial advice. Unless the context otherwise requires, capitalized terms used in this disclaimer shall have the meanings given to them in the Binance Trading Bots Terms. Futures DCA is restricted in certain countries and to certain users. This content is not intended for users/countries to which restrictions apply. For more information, see the Binance Trading Bots Terms, our Terms of Use and Risk Warning.