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DCA with the Money Supply Index

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DCA with the Money Supply Index (MSI) by zdmre

This strategy is based on the Money Supply Index (MSI) by zdmre and enhances it with two functional options for users: a DCA (Dollar-Cost Averaging) approach and a signal-based buy/sell mode. It’s designed to help traders and investors make data-driven, disciplined entry decisions based on monetary supply trends.

🧠 Concept Overview

The Money Supply Index (MSI) provides insight into how liquidity (money supply) influences market movements. This strategy builds upon that foundation by allowing users to either:

Accumulate positions over time using DCA, based on favorable MSI conditions.

Execute a single buy and sell trade, optimized for bull market conditions.

⚙️ Inputs Explained
General Parameters

Start Bar Index / Stop Bar Index
Defines the range of bars (historical data) for backtesting or strategy visualization.

Long DCA
Activates the DCA mode. If unchecked, the strategy operates in single-entry/single-exit signal mode.

Trading Signal
Enables signal-based entries and exits when the MSI reaches predefined thresholds.

DCA Parameters

Entry Value
The MSI value that triggers a DCA buy event. When the MSI crosses below this value, the strategy considers it a favorable moment to deploy the saved capital.

Saved Amount
The amount of money set aside regularly (e.g., monthly) for investment. This simulates the DCA effect by accumulating capital and deploying it when conditions are optimal.

Data Inputs

Money Supply
The data source for the Money Supply Index (default: ECONOMICS:USM2).

Relational Symbol
The market instrument to compare against the money supply (default: NASDAQ_DLY:NDX). This allows the strategy to measure liquidity impact on a specific market.

Chart Display Options

You can toggle these metrics on the chart for better visualization:

Entry Price (green) – The price level of executed buys.

Cash Balance (yellow) – Remaining uninvested capital.

Invested Capital (red) – Total amount currently invested.

Current Value (blue) – The current valuation of the investment.

Profit (purple) – The total realized and unrealized profit.

Trades on Chart / Signal Labels / Quantity – Enables trade markers, signal text, and position size visualization.

📈 How the Strategy Works
1️⃣ DCA Mode

In DCA mode, the strategy simulates periodic savings and only invests when the MSI indicates favorable liquidity conditions (based on the Entry Value).
This approach aims to achieve the best possible average entry price over time — a powerful strategy for long-term investors seeking stable accumulation with reduced emotional bias.

2️⃣ Signal-Based Mode

In signal mode (with DCA disabled), the strategy performs one buy and one sell trade based on MSI turning points.
It’s most effective during bull markets, where liquidity expansion supports upward momentum.
This mode helps identify high-probability entry and exit zones rather than averaging in continuously.

💡 Additional Notes

This strategy includes helpful metrics to monitor your personal investment performance — showing invested capital, cash reserves, and profit in real-time.

The goal is to combine macroeconomic insight (money supply) with disciplined execution and capital management.

⚠️ Disclaimer

This strategy is for educational and research purposes only. It does not constitute financial advice. Always conduct your own analysis before making investment decisions.

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