I Posted about my Dynamic DCA strategy here 2 years ago and here's an Update

About two years ago, I wrote A Practical Guide to Dynamic DCA + Risk Metric Tier List on here. It got a good response and with the current drawdown I've been seeing tons of strategy posts with people asking how they should DCA, what others are doing. It reminded me of my post back then so I wanted to follow up on this 2 years later. Maybe a bit of a humblebrag, but I hope this can be of help for some of you guys.

What's the strategy?

Dynamic DCA is about adjusting your investment based on the current market conditions. You use a risk metric to figure out whether the market is overbought or oversold, then invest more when risk is low and invest less (or nothing, or sell) when risk is high. From my original post:

The longer explanation is in that post if you want to deep-dive and learn about it. I linked several risk metrics one could use to define the buy/sell amounts for a strategy.

My results (or my humblebrag)

I've been running a moderate strategy since 2022. That strategy has returned about 170%. Normal DCA over the same period would've gotten me around 70%. Same dollar amount going in, but I ended up with significantly more BTC because I was buying heavier when prices were low and pulling back when they were high.

Some thoughts

The emotional side is still the hardest part. When risk is low, the market feels awful. Every headline says crypto is dead. That's when the strategy tells you to buy more. Mine is doing that right now. Having rules I set in advance makes it way easier to actually follow through.

You don't need a perfect risk metric. You need one that's roughly right and that you'll actually stick to. I didn't touch my strategy once it was set.

As I said in my original post two years ago: "dynamic DCA isn't about timing the market perfectly. It's about making informed decisions based on market conditions."

Tier list update

My original post had a tier list of risk metrics. Most of it still holds up. Alphasquared is still what I use. Benjamin Cowen's indicator is still good if you're willing to pay. Fear and Greed Index is still more of a sentiment thing than something I'd build a DCA strategy around.

If you're just starting

Pick a risk metric. Set your thresholds. Commit to it for a full cycle. It's not complicated. The hard part is trusting it when your gut tells you to do the opposite.