Most DCA losses in futures don't come from bad math. They come from 𝗼𝘃𝗲𝗿𝘀𝗶𝘇𝗶𝗻𝗴 𝗮𝗻𝗱 𝗵𝗮𝘃𝗶𝗻𝗴 𝗻𝗼 𝗽𝗹𝗮𝗻. But the math 𝗜𝗦 𝗱𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝘁 𝗳𝗼𝗿 𝗹𝗼𝗻𝗴𝘀 𝗮𝗻𝗱 𝘀𝗵𝗼𝗿𝘁𝘀, so here it is 👇
𝗤: 𝗛𝗼𝘄 𝗱𝗼 𝗜 𝘁𝗮𝗸𝗲 𝗮 𝟮𝗻𝗱 𝗲𝗻𝘁𝗿𝘆 (𝗗𝗖𝗔) 𝘄𝗵𝗲𝗻 𝗮 𝘁𝗿𝗮𝗱𝗲 𝗴𝗼𝗲𝘀 𝗮𝗴𝗮𝗶𝗻𝘀𝘁 𝗺𝗲?
1️⃣ 𝗥𝘂𝗹𝗲 #𝟭: 𝗪𝗶𝗱𝗲 𝗴𝗮𝗽𝘀 𝗼𝗻𝗹𝘆
DCA's goal is to 𝗽𝘂𝗹𝗹 𝘆𝗼𝘂𝗿 𝗮𝘃𝗲𝗿𝗮𝗴𝗲 𝗰𝗹𝗼𝘀𝗲𝗿 𝘁𝗼 𝘁𝗵𝗲 𝗰𝘂𝗿𝗿𝗲𝗻𝘁 𝗽𝗿𝗶𝗰𝗲.
Long $SOL at $𝟭𝟬𝟬, add at $𝟵𝟴 → 𝗮𝘃𝗲𝗿𝗮𝗴𝗲 $𝟵𝟵, and your 𝗿𝗶𝘀𝗸 𝗷𝘂𝘀𝘁 𝗱𝗼𝘂𝗯𝗹𝗲𝗱.
Add at $𝟴𝟬 → 𝗮𝘃𝗲𝗿𝗮𝗴𝗲 $𝟵𝟬. That's a 𝗿𝗲𝗮𝗹 𝗰𝗵𝗮𝗻𝗴𝗲.
(Assumes 𝗹𝗼𝘄 𝗹𝗲𝘃𝗲𝗿𝗮𝗴𝗲. At 𝟭𝟬𝘅, a 𝟭𝟬% 𝗱𝗿𝗼𝗽 already 𝗹𝗶𝗾𝘂𝗶𝗱𝗮𝘁𝗲𝘀 𝗮𝗻 𝗶𝘀𝗼𝗹𝗮𝘁𝗲𝗱 𝗹𝗼𝗻𝗴, so you'd never reach $80.)
2️⃣ 𝗟𝗢𝗡𝗚: 𝗦𝗮𝗺𝗲 𝗱𝗼𝗹𝗹𝗮𝗿𝘀 𝗯𝘂𝘆 𝗠𝗢𝗥𝗘 𝗰𝗼𝗶𝗻𝘀 𝗮𝘁 𝗮 𝗹𝗼𝘄𝗲𝗿 𝗽𝗿𝗶𝗰𝗲
Long 𝟭𝟬𝟬 𝗦𝗢𝗟 @ $𝟭𝟬𝟬 ($𝟭𝟬,𝟬𝟬𝟬).
• Add 𝟭𝟬𝟬 𝗦𝗢𝗟 @ $𝟴𝟬 ($8,000) → 200 SOL, 𝗮𝘃𝗴 $𝟵𝟬.𝟬𝟬
• Add $𝟭𝟬,𝟬𝟬𝟬 @ $𝟴𝟬 = 𝟭𝟮𝟱 𝗦𝗢𝗟 → 225 SOL, 𝗮𝘃𝗴 $𝟴𝟴.𝟴𝟵
𝗔𝗱𝗱𝗶𝗻𝗴 𝗯𝘆 𝗱𝗼𝗹𝗹𝗮𝗿𝘀 gives a 𝗹𝗼𝘄𝗲𝗿 𝗮𝘃𝗲𝗿𝗮𝗴𝗲 because you added 𝗺𝗼𝗿𝗲 𝗰𝗼𝗶𝗻𝘀 (and more exposure).
3️⃣ 𝗦𝗛𝗢𝗥𝗧: 𝗦𝗮𝗺𝗲 𝗱𝗼𝗹𝗹𝗮𝗿𝘀 𝗯𝘂𝘆 𝗙𝗘𝗪𝗘𝗥 𝗰𝗼𝗶𝗻𝘀 𝗮𝘁 𝗮 𝗵𝗶𝗴𝗵𝗲𝗿 𝗽𝗿𝗶𝗰𝗲
Short 𝟭𝟬𝟬 𝗦𝗢𝗟 @ $𝟭𝟬𝟬 ($𝟭𝟬,𝟬𝟬𝟬), price pumps to $𝟭𝟯𝟬.
• Add $𝟭𝟬,𝟬𝟬𝟬 @ $𝟭𝟯𝟬 = 𝟳𝟲.𝟵 𝗦𝗢𝗟 → 176.9 SOL, 𝗮𝘃𝗴 $𝟭𝟭𝟯.𝟬𝟰
• Add 𝟭𝟬𝟬 𝗦𝗢𝗟 @ $𝟭𝟯𝟬 ($13,000) → 200 SOL, 𝗮𝘃𝗴 $𝟭𝟭𝟱.𝟬𝟬
𝗔𝗱𝗱𝗶𝗻𝗴 𝗯𝘆 𝗰𝗼𝗶𝗻 𝗾𝘂𝗮𝗻𝘁𝗶𝘁𝘆 puts your average 𝗰𝗹𝗼𝘀𝗲𝗿 𝘁𝗼 𝘁𝗵𝗲 𝗺𝗮𝗿𝗸𝗲𝘁, but it costs $𝟭𝟯,𝟬𝟬𝟬 𝗼𝗳 𝗻𝗲𝘄 𝗲𝘅𝗽𝗼𝘀𝘂𝗿𝗲.
𝗧𝗵𝗲 𝗿𝗲𝗮𝗹 𝗹𝗲𝘀𝘀𝗼𝗻: your average moves toward the new price in proportion to 𝗵𝗼𝘄 𝗺𝗮𝗻𝘆 𝗖𝗢𝗜𝗡𝗦 𝘆𝗼𝘂 𝗮𝗱𝗱. 𝗕𝗶𝗴𝗴𝗲𝗿 𝗮𝗱𝗱 = 𝗯𝗲𝘁𝘁𝗲𝗿 𝗮𝘃𝗲𝗿𝗮𝗴𝗲 = 𝗯𝗶𝗴𝗴𝗲𝗿 𝗿𝗶𝘀𝗸.
4️⃣ 𝗧𝗵𝗲 𝘀𝘂𝗿𝘃𝗶𝘃𝗮𝗹 𝗿𝘂𝗹𝗲 🛡️
Before your first entry, decide the 𝘁𝗼𝘁𝗮𝗹 𝗿𝗶𝘀𝗸 𝗳𝗼𝗿 𝘁𝗵𝗲 𝘄𝗵𝗼𝗹𝗲 𝗹𝗮𝗱𝗱𝗲𝗿 (for example 𝟭-𝟮% 𝗼𝗳 𝘆𝗼𝘂𝗿 𝗮𝗰𝗰𝗼𝘂𝗻𝘁 across ALL entries). Keep 𝗲𝗻𝘁𝗿𝘆 𝟭 𝘀𝗺𝗮𝗹𝗹 𝗲𝗻𝗼𝘂𝗴𝗵 to leave room for entry 2. Know your 𝗹𝗶𝗾𝘂𝗶𝗱𝗮𝘁𝗶𝗼𝗻 𝗽𝗿𝗶𝗰𝗲 and your 𝗺𝗮𝘅 𝗻𝘂𝗺𝗯𝗲𝗿 𝗼𝗳 𝗗𝗖𝗔𝘀.
𝗖𝗵𝗲𝗮𝘁 𝘀𝗵𝗲𝗲𝘁:
• 𝗦𝘁𝘂𝗰𝗸 𝗹𝗼𝗻𝗴: same $ size buys 𝗺𝗼𝗿𝗲 𝗰𝗼𝗶𝗻𝘀, 𝗹𝗼𝘄𝗲𝗿 𝗮𝘃𝗲𝗿𝗮𝗴𝗲, more exposure
• 𝗦𝘁𝘂𝗰𝗸 𝘀𝗵𝗼𝗿𝘁: same 𝗰𝗼𝗶𝗻 𝗾𝘂𝗮𝗻𝘁𝗶𝘁𝘆 gives the 𝗯𝗲𝘁𝘁𝗲𝗿 𝗮𝘃𝗲𝗿𝗮𝗴𝗲, more $ exposure
• 𝗡𝗲𝘃𝗲𝗿 𝗗𝗖𝗔 without a 𝘄𝗶𝗱𝗲 𝗴𝗮𝗽, a 𝘀𝗶𝘇𝗲 𝗹𝗶𝗺𝗶𝘁 and an 𝗲𝘅𝗶𝘁 𝗽𝗹𝗮𝗻
𝗗𝗶𝗱 𝘆𝗼𝘂 𝗸𝗻𝗼𝘄 𝘁𝗵𝗶𝘀? 𝗕𝗼𝗼𝗸𝗺𝗮𝗿𝗸 🔖 𝗮𝗻𝗱 𝗿𝗲𝗽𝗼𝘀𝘁 🔁 for a trader who needs it.
𝗘𝗱𝘂𝗰𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗼𝗻𝗹𝘆. 𝗡𝗙𝗔. #BinanceAcademy
