Today, there are many strategies for investing in the cryptocurrency market that can ultimately generate an income. revenuebot uses a dollar value averaging (DCA) strategy to successfully trade and generate income in the long term.

DCA

This investment strategy is aimed at reducing the impact of volatility when buying assets. According to this strategy, the investor purchases an equal amount of an asset at a regular frequency, which also allows them to get a lower average purchase price on an asset than with a one-time purchase for the entire same amount. Simply put, using this strategy, you can buy more assets for the same amount of funds, although not all at once, but after a certain period of time.

Also, using this method when entering the market can reduce the level of asset volatility, in contrast to a one-time payment. When buying at regular intervals, you can flatten the average price, and for a long-term investment, this method reduces the negative impact on your investment.

The advantage of the strategy is that you can reduce the risk of a late bet, since choosing the right time to enter the market is one of the main conditions for a profitable investment. Making a trade at the wrong time is a common mistake for many investors, but if you use the DCA strategy, you can reduce the risk of entering a trade at the wrong time.

The DCA strategy has historically proven to be the most workable for, and at the same time has always worked, on any assets. Do not forget that this strategy does not completely reduce all risks, but only helps to smooth out the moment of entering the market, while minimizing the risk of unfortunate timing. The strategy also does not guarantee success when investing, because there are a number of other negative factors, for example, a global trend change.

An example of a DCA strategy for investing in bitcoin

Let's analyze the strategy of averaging the dollar value using the example of bitcoin. Suppose you have a sum of $ 10,000 and it is a smart decision to invest it in the main coin on the crypto market. But since the price of the cryptocurrency will fluctuate in the same range for some time, we can put the DCA strategy into practice. To do this, you can divide $ 10,000 into 100 parts, $ 100 each, and buy bitcoin for this amount every day, regardless of its price. Based on this, the period of our entry is extended by 100 days.

You can also use this strategy for a much longer period. For example, bitcoin entered a bear market, a bullish trend is not expected for at least another two years. But we know that it will come and we want to prepare for it in advance. In this case, it should also be divided into 100 parts, but buying bitcoin every week for $ 100, which will take just over 2 years. Thus, we create a long-term position during an extended downtrend. With such a position construction, we will not miss the beginning of an uptrend, and we will also reduce the risks when entering the market during a downtrend.

But do not forget that this strategy has risks, since we are buying descending assets. Based on this, the investor is advised to wait for the end of the bearish trend and only then enter the market. In this case, the average cost of an asset will be higher, but most of the risk will also decrease.

RevenueBot and DCA strategy

The basic principle of operation of bots with the LONG algorithm is as follows: during the entire trading cycle, the bot buys an asset in small volumes, constantly averaging the price, after which it sells the asset for the money spent + percentage of profit. The bot uses a pre-created grid of orders, buying in small parts when the asset price falls, which allows you to get the optimal average price.

Let's take a closer look at what the order grid for the LONG algorithm is and how it is calculated.

The order grid is a table in which the rows are the order numbers, and the columns are the order volume and its price. The number of table rows is determined by the number of orders in the grid.

How are the order prices calculated in the grid?

The order prices in the grid are calculated from the current price on the exchange.

The price of the first order in the grid is set by the setting "First order indent (%)" - the indent of the first order in% (by what percentage the price of the first order in the grid will be less than the current price).

Setting "Price change overlap (%)" - the percentage of price change overlap sets the percentage of the order grid to cover the price change. This setting specifies the percentage difference between the price of the first and last order. In fact, with this setting, you define the limits within which the bot will average.

The order prices in the grid are distributed over the entire overlap of the price change. The distribution of order prices in the grid can be linear (by default) or logarithmic.

• Linear distribution specifies an even distribution of prices across the entire price change overlap (the same distance between prices across the entire price change overlap).
• Logarithmic distribution sets a high density of orders near the current price on the exchange. This is done in order to involve more of the deposit in trading near the current price, since the main fluctuations occur precisely near the current price.

For example, the current price of an asset is 100, the percentage of overlapping price changes is 50%, the indent of the first order is 5%, the number of orders is 10.

A linear distribution will set prices as 95908580757065605550

A logarithmic distribution will set prices as 95939086817671645950

As you can see, with the logarithmic distribution, we will get more orders near the current price.

How is the order volume calculated in the grid?

The Martingale system is used to calculate the volume of orders. The Martingale system sets the percentage by how much each next order in the grid is larger than the previous one. The first order in the grid is the smallest in volume and the closest to the current price, each subsequent order is larger than the previous one by a specified percentage and further from the current price. This makes it possible to make a profit with a smaller bounce in price. The higher the Martingale percentage, the less price rebound is needed to get a profit.

Detailed information on how revenuebot works, an example of calculating a grid of orders, features of the SHORT algorithm can be found in our Knowledge Base.