HOW TO USE DCA FOR FUTURES TRADING. threadπ
The idea behind using DCA on futures trading is the same as when we apply it on spot trading. To help in faster recovery from drop in price on a previous entry.
You get different entry levels at lower prices than the initial entry.
The idea behind using DCA on futures trading is the same as when we apply it on spot trading. To help in faster recovery from drop in price on a previous entry.
You get different entry levels at lower prices than the initial entry.
The advantage is that it keeps you longer in the trade and helps you recover your losses faster. For example, remember those days when your entry goes lower and then run back up?
In this case, as it goes lower, you keep adding to your existing position.
In this case, as it goes lower, you keep adding to your existing position.
Then as the market recovers and bounce back up you're already back in profit.
The secret is to use limit orders for your entry. Not the regular Stop Limit order we trade futures with
The secret is to use limit orders for your entry. Not the regular Stop Limit order we trade futures with
Now let us consider an example, We know quite well that price always bounces off an EMA.
Lets say we took an entry into AXS at 133.50 just indicated in the image below. & then we spot where we have our EMAs...
133.43(50D EMA), 131.50(20D EMA)
We open a limit order 4 those levels
Lets say we took an entry into AXS at 133.50 just indicated in the image below. & then we spot where we have our EMAs...
133.43(50D EMA), 131.50(20D EMA)
We open a limit order 4 those levels
Now, if the market drops to 133.43, our first limit order gets filled and add to our existing position.
Maybe it goes lower to retest the 20D EMA, before bouncing back up, our limit order for 131.50 gets filled.
Maybe it goes lower to retest the 20D EMA, before bouncing back up, our limit order for 131.50 gets filled.
Now once the market bounces back up from there, our trade is already in recovery of the amount we lost from the drop off our first entry.
Precisely the same way DCA works for spot. Like and retweet for others to learn.
Precisely the same way DCA works for spot. Like and retweet for others to learn.
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