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Investment Strategy: Tiered DCA In/Out

EscapeMint uses a tiered Dollar Cost Averaging (DCA) strategy that automatically adjusts investment amounts based on asset performance. This creates a systematic "buy low, sell high" behavior.

The Problem with Traditional DCA

Traditional DCA invests a fixed amount at regular intervals regardless of price:

Week 1: Buy $100 (price $50) → 2 shares
Week 2: Buy $100 (price $40) → 2.5 shares
Week 3: Buy $100 (price $60) → 1.67 shares
Week 4: Buy $100 (price $30) → 3.33 shares

This is better than lump-sum investing in volatile markets, but it doesn't capitalize on buying opportunities when prices drop significantly.

Tiered DCA: The EscapeMint Approach

EscapeMint uses three tiers of DCA amounts based on performance:

Performance DCA Amount Reasoning
Gaining or on-track input_min Asset doing well, invest conservatively
Below cost basis input_mid Asset down, good buying opportunity
Significant loss input_max Asset way down, maximize accumulation

Example Configuration

input_min_usd: $100   (when profitable)
input_mid_usd: $200   (when losing < 25%)
input_max_usd: $500   (when losing > 25%)
max_at_pct: -0.25     (threshold for max tier)

How Tiers Are Selected

┌─────────────────────────────────────────────────────────┐
│                     START                               │
└─────────────────────┬───────────────────────────────────┘
                      ▼
           ┌─────────────────────┐
           │  gain_usd < 0 ?     │
           │  (losing money)     │
           └──────────┬──────────┘
                      │
        ┌─────────────┴─────────────┐
        │ YES                   NO  │
        ▼                           ▼
┌───────────────────┐      ┌───────────────────┐
│  gain_pct <       │      │  Use input_min    │
│  max_at_pct ?     │      │  (on track)       │
└────────┬──────────┘      └───────────────────┘
         │
   ┌─────┴─────┐
   │YES     NO │
   ▼           ▼
┌──────────┐ ┌──────────┐
│input_max │ │input_mid │
│(big loss)│ │(small    │
└──────────┘ │ loss)    │
             └──────────┘

The Sell Side: Taking Profits

When your investment exceeds the target growth rate by more than min_profit_usd, EscapeMint recommends selling:

Accumulate Mode (default: true)

Accumulate = true: Sell only the DCA amount to take partial profits

Target value:  $1,200
Actual value:  $1,350  (above by $150)
min_profit:    $100

Action: SELL $100-$500 (the current tier amount)
Result: Lock in some profits, keep the rest invested

Harvest mode (accumulate = false): Harvest the entire position

Target value:  $1,200
Actual value:  $1,350  (above by $150)
min_profit:    $100

Action: SELL $1,350 (entire position)
Result: Cash out completely, restart DCA cycle

When to Use Each Mode

Mode Best For Behavior
accumulate: true Long-term growth Sells profits, keeps core position
accumulate: false (Harvest) Volatile assets, cash generation Harvests entire position when profitable, restarts

Complete Decision Flow

┌─────────────────────────────────────────────────────────┐
│                  Get Current State                      │
│   - actual_value: Current market value                  │
│   - expected_target: What you'd have at target APY      │
│   - target_diff: actual - expected                      │
│   - gain_pct: (actual - invested) / invested            │
└─────────────────────┬───────────────────────────────────┘
                      ▼
           ┌─────────────────────┐
           │ target_diff >       │
           │ min_profit_usd ?    │
           │ (above target)      │
           └──────────┬──────────┘
                      │
        ┌─────────────┴─────────────┐
        │ YES                   NO  │
        ▼                           ▼
┌───────────────────┐      ┌───────────────────┐
│      SELL         │      │ Select DCA tier   │
│                   │      │ based on gain_pct │
│ accumulate=true:  │      └─────────┬─────────┘
│   sell limit amt  │                │
│                   │                ▼
│ accumulate=false: │      ┌───────────────────┐
│   sell everything │      │  cash >= limit ?  │
└───────────────────┘      └─────────┬─────────┘
                                     │
                           ┌─────────┴─────────┐
                           │YES             NO │
                           ▼                   ▼
                    ┌────────────┐      ┌────────────┐
                    │ BUY limit  │      │ BUY what   │
                    │ amount     │      │ you can    │
                    └────────────┘      │ afford     │
                                        └────────────┘

Real-World Example

Initial Setup

Fund: Robinhood TQQQ
Fund Size: $10,000
Target APY: 30%
Interval: 7 days

DCA Tiers:
- input_min: $100 (when profitable)
- input_mid: $200 (when down < 25%)
- input_max: $500 (when down > 25%)
- max_at_pct: -25%
- min_profit: $100

Month 1: Building Position (Bear Market)

Week Value Gain % Tier Action Cash After
1 $0 - min BUY $100 $9,900
2 $90 -10% mid BUY $200 $9,700
3 $250 -14% mid BUY $200 $9,500
4 $350 -30% max BUY $500 $9,000

Result: Accumulated $1,000 invested at low prices

Month 2: Recovery (Bull Market)

Week Value Gain % Target Diff Action
5 $1,100 +10% $1,020 +$80 BUY $100
6 $1,250 +14% $1,125 +$125 SELL $100
7 $1,180 +7% $1,135 +$45 BUY $100
8 $1,350 +15% $1,245 +$105 SELL $100

Result: Taking profits when above target, buying on dips

Why This Works

1. Buys More at Lower Prices

When the market drops 25%+, you're buying at a discount with larger amounts.

2. Automatic Rebalancing

Selling when above target naturally rebalances your portfolio.

3. Removes Emotion

Fixed rules prevent panic selling during crashes or FOMO buying at peaks.

4. Compounds Gains

Taking profits and reinvesting creates a compounding cycle.

Comparison to Buy-and-Hold

Scenario Buy & Hold Tiered DCA
Steady growth Similar returns Similar returns
Volatile growth Miss buying opportunities Accumulates more shares
Crash then recovery Hold through drawdown Accumulates at lows, profits on recovery
Prolonged decline Stuck with losses Limits exposure, builds cash

Key Insights

  1. The system favors volatility - More price swings = more opportunities
  2. Cash is strategic - Having cash available lets you buy dips
  3. Patience pays - The strategy works over months/years, not days
  4. No predictions needed - Rules respond to what happened, not what might happen