Hi, it's me, back with more spreadsheets. This time i made this thing.
oh no
I don't know how to use arrays.
for a disclaimer, I did something similar to this last year, but it wasn't automated- so it was worse obviously because automation is king.
anyways, basically smart dca is a term that some people (me) like to use in finance for buying and selling when an asset hits a certain amount of growth or loss. some people call it smart dca because.. they think it's better or something, idk. you know finance people they're pretty pretentious and unlikable.
I just made it so if bitcoin drops 10% in a week, we invest $40, if it's over 10% in growth, we sell 10% of our bitcoin. how'd we end up?
S-DCA results
Yeah not bad. only issue we find here is usually the algorithm is found buying down from a market collapse and not finding any bottoms, in 2018 we see the algorithm buy heavily around the start of 2018 till June of 2018. but the bottom of bitcoin hit around late 2018, where we then bought nothing for half a year even though bitcoin was at the nice price of 3-5k. Either way, a total investment of $1760, a total of $3200 of bitcoin sold during this time, with an additional $400 in bitcoin currently. or a profit margin of 110%. We doubled our money.
what's sorta interesting though is that our percentage of profit has done down significantly since 2018.
percentage of profit S-DCA
doesn't really mean too much since bitcoin went up a lot more percentage-wise in the 2017-2018 bull market than the 2020-2021 one. so we made more when selling in 2017 than 2021, and we sold more often in 2021 than now.
so let's look at normal DCA. I decided to invest $5.5 per week, no selling. $5.5 was chosen since we invested about the same amount of USD into the smart-dca.
oof
trading b*ts around the world seethe. Anyways this was very clearly a victory for the DCA method. Again, about the same amount of money was invested in both portfolios.
for a note, i did forget to subtract 1, or 100% from the profit of DCA, you can see at the start it starts at 100% not 0%, so its total profit was, still way more than S-DCA regardless. Fixed it later on.
let's look at static numbers.
USD balance
btc owned
amount invested in each portfolio
dca invested more during late 2018 early 2019 because... i don't know why. I tried tellin google finance to not, and it told me they're google, they can do what they want. basically it was doing the dca order every 1-2 days instead of once a week during that time. it's just a btc thing too.
most of our profits for both of these portfolios came in 2017 when bitcoin was cheaper. so, it's hard to decide which strategy is better when we're using one asset to decide how good something is, when we all know the winning strategy, in this case, would be whoever bought the most bitcoin early on. Smart DCA invests way more during a bear market, compared to a bull market, and DCA just invests. This timeline begins during the start of a bull market.
so let's do a different perspective, an asset that uh, people don't think about often, let's do blackberry, a company that has traded sideways in the last 5 or so years.
so first off with no changing anything S-DCA didn't want to invest into blackberry at all, which is fair and would normally be an amazing play to do, but we don't want profits, we're investing in blackberry (sorry bb you're actually a cool company with a great past of industry-changing technologies)
so, I made it so S-DCA would invest/sell every 5% gain/drop of the stock price instead of 10%.
percentage of profit on BB
early on, both traded very similarly. DCA had higher highs, S-DCA had higher lows. by 2019 S-DCA was winning taking the W. then got ruined when BB went up a ton in 2021, but as BB went down, S-DCA..
okay it's clear that in this case S-DCA was a risk mitigator. which.. yeah. selling your stock and shares when it goes up, and only buying when an asset goes down a ton, that's mitigating risk more than just buying once every week. Overall during the "good times" you make less, but during the "bad times", you have more left over.
BB owned
for reference during that circled area, BB went up 131%. About half the stock was sold during that time.
total USD Balance
to be honest, we don't really see the S-DCA portfolio here go down for an extended amount of time, we see it trade sideways around 2019-2020, but unlike what's happening to the DCA portfolio currently, the S-DCA is just trading sideways.
let's do another asset for finality, we've had an asset go up a ton (btc), an asset trade sideways (bb), so let's find one that died. I tried E*er*ra*de, but google sucked at keeping an accurate historical price of them. So, ZOOM!
zoom profit percentages
yeah. it's what we expected. for reference, zoom went (from bottom to top) 800%, DCA went up 430%, and S-DCA went up 150%.
Overall,
both methods of investing are valid, most people don't have time to look through every single investment and buy and sell based on changes on the market, also, short-term capital gains exist.. and some people want the added risk of HODL, personally though, if my asset went up 200% in price, I am going to be selling some of it depending on the situation I'm in. We don't live in a world where bitcoin can go up 10,000% in a day anymore, so for me, I'm going to move on and use those profits, instead of hoping it goes up even more.
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