Trader builds Bitcoin ‘buy the dip’ bot, outperforms DCA
While a bullish backdrop emerges in February, spare a thought for the traders trying to time the market. One savvy trader by the name of u/Samjhill on Reddit has built a trading tool that outperforms dollar-cost averaging (DCA) for buying Bitcoin (BTC).
DCA is the strategy in which investors buy a small amount regularly regardless of price fluctuations. It works in contrast to traders keen to get the lowest entry, timing the dip to perfection and avoiding “catching a falling knife.”
The aptly named “Buy the Dip Bot” aims to “get the best price for a given asset by using a limit strategy.” Inspired by another Redditor who suggested a manual limit-buy-order strategy for getting the best price entry, u/Samjhill took the idea one step further, coding up a dip-buying bot.
The bot places limit orders at several intervals below the current price, and if an order gets executed or canceled, it starts again. Using tech from Amazon Web Services, Python, Lambda, DynamoDB and React.JS while hosted on GitHub, the cost to run is low, “about $5 per month.”
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.”
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When asked by Cointelegraph if he would recommend the bot as opposed to regular DCA, Sam replied it depends on where you
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