Methodology
InvestoAI Corp · Smart DCA v2.0 · figures as of October 2026
This page sets out exactly how the Smart DCA rule decides, and how the backtest figures on the site were produced, so that anyone can check them.
1. The rule
| Day | Amount |
|---|---|
| Normal | 1× your daily base |
| VIX closes at or above 25 | 2× |
| Golden Pit: S&P 500 closes 10% or more below its 52-week high | 5× |
| Diamond Pit: 20% or more below | 10× |
- The deepest zone that applies wins; only one multiple is used per day.
- Zones are checked once per trading day using the previous close; orders are placed at about 3:45 PM ET.
- Every day, 0.5× the daily base is set aside into a reserve. The extra above 1× on an elevated day is paid from that reserve and is capped at what the reserve holds, so the rule never asks for money you have not set aside.
2. The backtest on the homepage
- Instrument: QQQ, adjusted daily closes, January 3, 2000 to December 31, 2024 (6,289 trading days). VIX daily closes for the volatility zone.
- Contributions: $150 every trading day: $100 base plus $50 into the reserve. $943,350 contributed in total.
- Benchmark: the same $100 a day invested in QQQ every trading day, plus the same $50 a day placed in a savings account earning 3% a year. Idle cash in the reserve also earns 3% in both cases.
- Result: $8.4 million with the rule versus $6.1 million without; $2.2 million more. Annualised on the daily contributions: 14.8% a year with the rule versus 12.9% without. The $100-a-day portion is identical in both; the entire difference comes from the $50-a-day reserve, which ended at $2.7 million with the rule and $468 thousand in the savings account, 5.7 times as much.
3. Every window since 2000
Because one path can flatter a rule, we also ran every rolling ten-year window with a start year from 2000 onwards, on SPY and QQQ. The rule finished ahead of the benchmark in 73 of 78 windows, and in 38 of 38 windows starting in 2010 or later.
4. How often the rule acts
SPY, 2010 to 2025: Normal 83.3% of trading days, Volatility 5.9%, Golden Pit 9.5%, Diamond Pit 1.3%. In other words, about one trading day in six is elevated, and the deepest fall the rule acted on was 33.7% below the 52-week high. Since 2000 the figures are 27.3% elevated and a deepest fall of 51.5%.
5. What the backtest does not include
- Brokerage commissions and fees, taxes, and bid-ask spread. Schwab charges no commission on ETF orders; other brokerages may.
- Fractional shares: the backtest invests exact dollar amounts; in a live account orders are rounded to whole shares and the remainder carries to the next day.
- Market orders placed at 3:45 PM fill near, not at, the closing price used in the backtest.
- The rule was not actually run during the periods shown. All results are hypothetical. Past performance does not guarantee future results.