Automate Trading | Robot vs Man: Bitcoin DCA Bot Outperforms Dollar Cost Averaging by 10%

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 Redditor Brutus has developed an automated dip-buying robot that beats the dollar-cost average into Bitcoin by approximately 10%.

Trader builds Bitcoin ‘buy the dip’ bot, outperforms DCA

A bullish backdrop is emerging in February. But spare a thought to traders trying time the market. Reddit user u/Samjhill has created a trading platform that is more efficient than dollar-cost averaging (DCA), for purchasing Bitcoin (BTC).

DCA is a strategy where investors purchase a small amount of stock regularly, regardless of fluctuations in price. This strategy is different from traders who want to get the lowest entry. It involves timing the dip perfectly and not “catching a falling knife.”

“Buy the Dip Bot”, aptly named, aims to “get the highest price for a particular asset by using a limit strategy.” u/Samjhill, inspired by another Redditor, suggested a manual limit buy-order strategy to get the best price entry.

The bot places limit orders at intervals lower than the current price. If an order is executed or cancelled, it begins again. The cost of running the bot is “about $5 per monthly” using tech from Amazon Web Services and Python, DynamoDB, DynamoDB, and React.JS hosted on GitHub.

While the bot has been beavering away since December, it hit a maiden milestone on Monday. Reaching profitability versus regular dollar-cost averaging, “the price-per-coin advantage is about (cheaper) 5%–10% right now, which you could also think of as getting that much more coin for your money,” Sam told Cointelegraph.

The bot runs a backtesting library to work out the best entry points for the limit buys. A complex process, the work paid off, culminated in a “winning strategy.”

When asked by Cointelegraph if he would recommend the bot as opposed to regular DCA, Sam replied it depends on where you are in your BTC journey:

“For people just starting out, regular DCA probably makes more sense since your goal is probably to stack as many coins as possible. For those later in their journey, they might have a decent stack already and want to minimize increasing their cost basis and so might benefit more from this.”

Sam, who first learned of Bitcoin around 2013, added that he is doing both DCA and the limit strategy “to get a more even curve of coin growth.”

While the future is currently Bitcoin orange for the trading bot, Sam built the system for easy integration with other coins. Ether (ETH) features on the GitHub page, and Sam hints he may roll out other coins to production.

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