The Elirox automated trading approach is based on the Dollar-Cost Averaging (DCA) principle, which involves dividing your trading deposit into periodic buy or sell trades. This helps achieve a better average entry price and reduces the impact of market volatility. Elirox's AI enhances this method for any asset by optimizing the settings of trading bot strategies. Here's how it works:
Imagine you have $3000 in trading funds and decide to trade the EUR/USD currency pair at an exchange rate of 1.20. You plan to go long, expecting the euro to rise against the dollar. Rather than investing your full trading ****deposit at once, you divide it into smaller, timed trades.
You start by purchasing 0.01 lots of EUR/USD with $1000 when the exchange rate is 1.20. This initial purchase gives you exposure to the market.
Suppose the exchange rate drops to 1.1980 (a 0.17% decrease). You decide to purchase an additional micro lot at this lower rate, using another $1000 from your broker deposit. Now, with a total of 0.02 lots, your average buying price becomes:
$Average Price = \frac{(1.20 \times 0.01) + (1.1980 \times 0.01)}{0.01 + 0.01} = 1.1990$
If the exchange rate continues to decline to 1.1960, you purchase another micro lot for $1000, further adjusting your average buying price:
$Average Price = \frac{(1.20 \times 0.01) + (1.1980 \times 0.01) + (1.1960 \times 0.01)}{0.01 + 0.01 + 0.01} = 1.1980$
By contrast, if you used all your investment at once, your average price would be 1.20, resulting in potentially lower profit afterward.
Use the DCA trading bot when you want to automate daily trades using technical indicators and risk management. It’s a versatile tool for automated trading, whether you're focused on long-term gains or intraday trading. This approach suits those seeking both consistency and flexibility in their trading strategy.
With the DCA strategy, you can choose between long and short positions:
📈Long Position (Buy Position)
In a long position, you speculate that the base currency will strengthen against the quote currency.
📉 Short Position (Sell Position)
In a short position in Forex trading, you speculate that the base currency will weaken against the quote currency.