Double Up (DCA)
The Double Up (DU) functionality in Gunbot is designed to automatically average down assets, reducing the average cost per unit when prices decline following a standard buy order.
By lowering the average price per unit, the necessary exit price for a profitable trade decreases. It's important to note that averaging down carries an inherent risk of investing more in units whose value has already fallen. Exercise caution when using this feature.
Utilize the DU guestimator sheet to model your DU settings.
Feel free to create a copy of the file. Special thanks to Trashdog01!
Functionality Explained
Here is an illustration of the Double Up function in action. The relevant settings applied in this example include:
- DU_METHOD set to HIGHBB. This method triggers each DU buy when the upper Bollinger Band crosses below the last buy price.
- DOUBLE_UP_CAP set to 1. Each DU buy equals the quantity of quote units currently owned.
- DU_CAP_COUNT set to 2. A maximum of two DU buys are permitted.
- DU_BUYDOWN set to 1. The minimum necessary price difference for a DU buy compared to the previous order's buy price.
Keep in mind that this example is intentionally simplified; actual amounts may differ.
The table below demonstrates how the average price per unit decreases after each DU buy:
| Units | Price per unit | Invested (cumulative) | Avg Price per Unit | |
|---|---|---|---|---|
| Buy | 100 | 12.500 | 1.250.000 | 12500 |
| DU Buy 1 | 100 | 10.800 | 2.330.000 | 11650 |
| DU Buy 2 | 200 | 8.090 | 3.948.000 | 9870 |
The resulting sell order would profitably sell all units at a considerably lower price than the initial buy order:
| Units | Price per unit | Proceeds | |
|---|---|---|---|
| Sell | 400 | 10.000 | 4.000.000 |
Options for configuring averaging down include:
- Buydown: A minimum price gap between the last buy and the next DU buy. Regardless of the chosen DU method, the buydown must be met for a DU buy.
- DU method: HIGHBB as demonstrated above, RSI where DU buys are executed only within a configurable RSI range, and a numerical value defining a percentage price drop compared to the last purchased price.
- Ratio: Specifies the additional quote units purchased for each DU buy.
- Frequency: Determines the allowed number of DU buy orders.
- Trailing: Optionally, DU buy orders can use trailing.
The Double Up feature enables investing substantial amounts of your base currency. Exercise caution when setting the ratio and frequency, and make sure you have enough available funds.