Dynamic DCA Exit Strategy + Risk Metric Tier List

9 months ago I created a Post about Dynamic DCA as a buying strategy and tons of people found it useful.
With BTC surging past the previous ATH, there's been a lot of questions about exit strategies, so I thought I'd create a quick guide and share a tier list of risk metrics (both free and paid) that everyone can use for dynamically DCAing out of the market.

Dynamic DCA Explained: This approach is about adjusting your investment based on the current market conditions. Unlike traditional DCA, dynamic DCA is more flexible. You still invest at a fixed schedule, but you buy more during times of low risk / corrections and start holding or even scale out during peak bullmarkets by using metrics / looking at indicators and adjusting the DCA-out amount based on them.

But why? This approach yields much higher returns. At the same time, it helps a ton with the emotional turmoil. Setting a strategy to take profits during bullruns and sticking to it is a godsend when the greed hits. It also helps with the emotional side when DCAing out of the market. It feels stupid to sell the same amount at 90k and 140k. You obviously want to take advantage of changes in the market.

Here's how I do it

1. Select a Risk Metric: This is crucial. A good risk metric helps you understand the current market conditions, whether it's overbought (high risk) or oversold (low risk). The more accurate the metric, the more powerful your strategy. None of these will be perfect, but they'll be useful.
2. Set Your Risk Thresholds: Decide the risk levels at which you'll sell more, do nothing, or even buy back. For example, I start selling when risk goes above 70 and increase the amount I DCA out in steps of 5. So I'll sell 2.5% at 70 risk, 5% at 75 risk and so on – while keeping a core position of 55% that never gets sold.
3. Stick to it: Keep an eye on the risk metric each time your DCA time comes around and adjust your sell amounts accordingly (or follow the notifications depending on what you use).

Now, onto the tier list of risk metrics. This list is based on my personal experience and research over the past 3 years. I've posted this before and it's largely similar.

S Tier

• AlphaSquared's Risk Metric (AlphaSquared): Still my go-to metric. It's been the most accurate during the late 2021 peak and 2022 bottom, nailing everything so far. It also offers a strategy builders and backtesting.
• Benjamin Cowen's Risk Indicator (IntoTheCryptoVerse): Solid choice with a wide range of metrics and a build-your-own-chart workbench. It's pricey, and has been a bit less accurate, but if you can afford it and value the other premium content, it's worth a shot.

A Tier

• CoinTalksCrypto's Bitcoin Bull Run Index (CBBI): Free and customizable. It didn't manage to nail either tops or bottoms so far, but it has been readjusted so maybe it'll fare better this time. It's mainly here because you can tweak the inputs if you trust yourself to make that judgement and because it's free.

B Tier

• Bitcoin Risk Level (Bitstack) Seems like this has been discontinued!
• LookIntoBitcoin's Reserve Risk (LookIntoBitcoin)
• TradingView Scripts mimicking Benjamin Cowen's model. There are a ton.

C Tier

• Fear and Greed Index (Alternative.me): More of a sentiment gauge than a risk metric. I find it less useful for dynamic DCA, though extreme greed readings can be a helpful secondary indicator.

That's it! I'm sharing this because I KNOW this will be useful for many, judging by the recent posts on here. Just to make things clear, Dynamic DCA-out isn't about timing the market perfectly. It's about making informed decisions based on market conditions, having a plan and scaling out over time and risk (because you can't time the market). You adjust your exit strategy based on the current market state, day by day, as you should.

Feel free to share your experiences or any other tools you find useful for dynamic DCA-out. Maybe I missed some new indicators in the meantime.