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Analyst Miles Deutscher Reveals Spot DCA Investing Strategy with Crypto Trading Bot
- Aussie trader Miles Deutscher believes the next few months of the crypto market will be an accumulation phase, where investors should continue strengthening their portfolios.
- He decided to test the convenience of trading bots by setting up an accumulation-based strategy – dollar-cost averaging.
- Deutscher is setting up the bots to make daily purchases of AUD $166.67 spread among 10 altcoins.
- The projects Deutscher is targeting includes Chainlink, Polygon and Internet Computer.
In theory, trading bots sound like a home run. Exchanges spruik their algorithms as providing guaranteed returns that can read and react to market movements at speeds humans can’t replicate. Bots also have the advantage of not having emotion (yet, anyway) which is a common pitfall for newer and even more experienced investors. Bots are a cornerstone of professional traders and institutions as they can be programmed to perform thousands of transactions per second to execute a plan. However, for beginners, most of the time the performance of trading bots falls flat. But what if you were to use a time-tested, conservative strategy like dollar-cost averaging? Aussie analyst Miles Deutscher put them to the test.
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AUD $10K to be Spread Among Ten Assets for Thirty Days
The premise of a DCA strategy is buying an asset (or group of assets) at set intervals. This avoids emotion-based trading, as you repeatedly purchase cryptocurrencies regardless of small market swings. Ultimately, for DCA to work, the market must eventually go up from the time the strategy begins…but more importantly, the investor has to resist the temptation to sell during dips or buy during runs.
Deutscher theorises that setting up a bot to commit to a DCA plan is a perfect match. And it makes sense – trading bots completely remove emotion from a strategy that relies on a lack of emotion.
According to the analyst, now is a great time to begin setting up a DCA, as the market is currently in an accumulation phase. He believes that most assets will be range-bound for the medium-term before they eventually breakout in the latter half of 2024 as macroeconomic conditions improve. Although his experiment will only last a month, ideally a beginner investor would employ less frequent transactions but over a longer period.
Deutscher picked ten altcoins to periodically buy into over the next 30 days, including some major coins like Chainlink (LINK), Polygon (MATIC) and Cosmos (ATOM). The setup is quite simple – the bot will automatically execute a purchase of $166.67 every day for the next month. He decided to use Bitget and OKX as the two exchanges to perform these actions.
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The results will be interesting – especially Deutscher isn’t using a pre-made algorithm that supposedly guarantees returns. Rather, he is simply automating a tried-and-tested investment strategy to reduce risk while improving convenience.
Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
