DCA and Martin Ge：deviation safety orders
As described in working principle of DCA bot,combination of DCA and Martin Gel is a strategy of adding the position adverse the trend. By adding positions at low positions, we can reduce our average price of total position, and can make profit faster after the market reversal. As shown in the figure below, as we buy more when the price falls, the profit price gets lower.
Overview of each deviation safety order step
DCA and Livermore: tendency safety orders
The speculative king Jesse Livermore proposed a way to build a position in "Reminiscences of a Stock Operator":
- Buy 20% of the total position first
- If you buy it wrong, stop loss when it falls 10%, and your loss is 2% of the total position.
- If you buy it right,buy 20% more when it rises 10%, and buy 20% more when is rises 10% agin, and buy 40% directly if it rises 10% agin. Expand victory results.Then hold it as long as it does not fall more than 10%. Once it fall more than 10%, you will sell all the positions immediately.
In 1907, Livermore correctly judged the big collapse of the stock market and earned 3 million US dollars within a day. In order to save the market, the financialist Morgan sent a special envoy to ask him not to short, and he agreed. In 1929, he was accurately short before the big collapse, earning 100 million US dollars to reach its peak.Reminiscences of a Stock Operator
Combining DCA with Lifomor's positioning method is a strategy of increasing the position in response to the trendency. First, make a test through small positions. After the trendency arrives, continue to increase the positions can better grasp a wave of trendency. As shown in the figure below, adding to the position when the price rises continuously, the stop loss price will be continuously shifted to protect your profit.
Overview of each tendency safety order step