TRADLEWARE-DCA+Trend ETF — Strategy by cs_lev
By cs_lev
Performance Metrics
- Author: cs_lev
- Symbol: AMEX:MGK
- Timeframe: 1 day
- Win Rate: 68.5%
- Profit Factor: 21.979
Description
DCA + Trend: Monthly Contributions with a Bear-Market Exit and Dip-Ladder Re-entryThis strategy treats "putting money in every month" and "managing the pile of money already invested" as two separate jobs. A fixed monthly contribution never stops, even in a bear market — but the accumulated stack gets pulled out entirely when the long-term trend breaks, and put back to work gradually as the market recovers rather than all at once.The target here is beating plain monthly dollar-cost averaging, not simple buy-and-hold. On broad-market ETFs, which tend to trend upward over long horizons, DCA already captures much of the benefit of buying dips just by staying systematic — a real bar to clear, not a strawman. It's also the one this strategy has consistently cleared across every asset tested so far (see Known limitations for where it falls short of buy-and-hold's raw return instead).How it worksEvery calendar month, a fixed dollar amount is invested, regardless of what the trend is doing — this means fixed dollars buy more shares exactly when the market is cheap, which is the whole point of dollar-cost averaging. Separately, a 200-day SMA acts as a trend filter for the accumulated position: when price closes below it, the entire stack built up so far is sold. When the trend recovers, that money doesn't necessarily go back in all at once — instead it can be split into tranches that buy in stages as price falls further below its prior peak during the bear market, so more of the recovery budget lands at genuinely lower prices instead of guessing the exact bottom.EntryThree separate mechanisms add to the position: Monthly DCA: on the first bar of every calendar month, a fixed dollar amount is invested — by default, this keeps happening even during a bear market (can be turned off to pause contributions below the trend line instead) Dip-ladder tranches: after a bear-market exit, the re-entry budget is split equally across up to three pieces, regardless of how deep each one triggers — each buys when price falls a further fixed percentage below the running all-time high (15%, 20%, and 30% below, by default) — this uses the all-time high as the reference level specifically because, unlike the moving average, it does not sink during the bear market Lump sum recovery: any part of the re-entry budget that wasn't already spent by the dip-ladder tranches is deployed in one shot on the first bar the trend recoversExitThe entire accumulated position (not the monthly contributions still to come) is sold in full the moment price closes below the 200-day SMA — a trend-broken event, not something that unwinds gradually. An optional "death cross" confirmation (50-day SMA also below the 200-day SMA) can be required before treating a dip as a genuine bear market, which reduces false exits during brief pullbacks.Parameters SMA period: 200 days (the trend filter for the exit) SMA hysteresis band: a dead zone around the SMA, on by default. The regime only flips bullish above SMA×(1+band) or bearish below SMA×(1-band); price sitting between those two lines just holds whatever state it was already in. This filters out marginal SMA crossings that would otherwise trigger an exit and re-entry over a move that never became a real trend break — most such round trips re-buy at close to the same price they sold at, paying costs without capturing anything. Set to 0 to require only a plain SMA cross. Monthly DCA amount: fixed dollar amount invested on the first bar of each month Lump re-entry percentage: how much of the value that was sold at the exit gets redeployed on recovery (0 = skip lump entirely and resume monthly DCA only; higher = more of the recovery captured, at the cost of more drawdown if the recovery turns out to be a false one) Death cross confirmation: off by default; when enabled, requires the 50-day SMA below the 200-day SMA before treating the market as unsafe DCA during bear regime: on by default; contributions keep buying through the bear market instead of pausing Dip-ladder toggle and three rung levels (percentage below the running high): default 15%, 20%, 30% below; any rung can be set to 0 to disable it Whole-share DCA: off by default. A fractional monthly quantity (contribution amount smaller than one share) rounds down to zero on most equity brokers and never fills or fires an alert. Turning this on banks any unspent contribution and carries it to the next month, firing a whole-share order once enough has accumulated Label offset: how far the buy/sell trade labels sit from the bar, in multiples of ATR(14)Chart labelsEvery fill is marked directly on the chart: a green label below the bar for each buy (tagging which mechanism fired — DCA, LUMP, or RUNG 1/2/3, combined if more than one lands on the same bar) and a red label above the bar for each exit (CRASH EXIT or PERIOD END), showing the blended profit/loss across everything that closed on that bar. Since one crash exit can unwind dozens of separate monthly contributions and dip-ladder buys at once, the P&L shown is the combined result of all of them, not just one trade. Both label types also show the cash left in the account after that fill — useful for keeping an eye on how close the pool is to running dry, since TradingView blocks an order it can't cover and DCA/lump/rung buys stall until the next sale refills it.Costs modelled0% commission (typical for US equity brokers), 1 tick slippage, fills at next bar's open.Intended assets and timeframeDaily bars, US equity ETFs. Built and tested on MGK specifically, using the settings published as its defaults (death-cross confirmation off, rungs at 15/20/30% below the running high) — that combination is the only one checked end-to-end against a live TradingView run. Seven other broad-market, growth, value, equal-weight, and momentum funds — QQQ, VOO, IVW, IVE, RSP, SPYM, and SPMO — were also tested, each with its own settings rather than MGK's defaults left unchanged, and are very likely to beat plain monthly DCA too: that pattern held without exception on every asset checked so far. Their validated combination is different from what's published here — death-cross confirmation on and wider rungs at 20/30/40% — which is the better starting point if you switch tickers, with QQQ as the one exception even to that (see Known limitations): it pairs better with death-cross confirmation off and the hysteresis band set to 2% instead. Parameter choices matter more than they might look — death-cross on/off, the lump percentage, and the rung spacing have each swung the outcome by a wide margin in testing — so tuning for whichever asset and regime you're actually using, rather than leaving the MGK-tuned defaults unchanged, is worth the effort.Known limitationsThe exit reacts at the next bar's open after the trend breaks, so it lags fast crashes rather than anticipating them. In a slow, grinding bear market, the dip ladder's fixed rungs can all fire and the market can keep falling anyway, leaving a larger paper loss than the version without a ladder — the extra return the ladder aims to capture on recovery is paid for with real, and sometimes severe, worst-case pain during a prolonged decline. Size the lump and rung percentages to a drawdown you could actually hold through, not just a comfortable one. Bear-market DCA contributions can sit on paper losses for a long time before a recovery arrives. Switching to one of the other seven validated funds calls for different settings than the published MGK defaults — see Intended assets and timeframe above. QQQ specifically pairs better with the death-cross confirmation off and the hysteresis band at 2% rather than either of the other two combinations. For VOO, turning death-cross confirmation on is a genuine trade-off rather than a clear-cut fix: it gives a smaller drawdown and better Calmar ratio at the cost of slightly lower return and Sharpe. TradingView's own chart price does not include dividends, so a live TradingView backtest will differ somewhat from a dividend-adjusted one, though trade dates should still match. Over the published defaults' validated window, trade count sits below the sample size usually wanted for stable statistics — treat this as a directional result to build on, not a confirmed edge, until it's been checked over a longer window or across more of the validated assets.If you already hold a lump-sum position and plan to add ongoing contributions on top of it, don't feed the lump into this strategy's own trading — a crash exit sells everything it holds at once, lump included, and testing found that dragged results down noticeably compared to keeping an existing lump in a separate buy-and-hold position and only running new contributions through this strategy. Even limited to just the ongoing contributions, though, this strategy's trading is not guaranteed to beat simply holding those same contributions — in the scenarios tested so far, plain buy-and-hold of the contributions matched or outperformed running them through the strategy's exit/re-entry logic. Treat this as a tool for managing how an existing trend-following thesis gets traded, not as a proven improvement over doing nothing.