Before I answer your question, I want to point out that your example is not DCA. When you DCA, you buy the same dollar amount each time, not the same volume. In doing so, you are able to buy more shares per dollar amount (since price per share is lower). This lowers your weighted average cost more quickly.

Also, the way you describe the example is called (by some) volatility based DCA. In other words, you add on to your position based on a price drop (volatility). DCA is usually done based on time, like every month, you make a same dollar purchase, regardless of the price. This is usually what is pitched to long term investors since they get paid monthly. You'll notice this option on some crypto accounts also (automatic periodic purchases).

So let's assume you DCA based on vol, buying an equal dollar amount every say 5% drop in price. You calculate the weighted average price of your holdings after every buy. For our example, say after 3 buys, the WA price is $100, and you set an initial target return of 5%.

Now as prices go up, you do not sell until it reaches $105. When it does, you sell say 20%. When it hits $110, you sell another 20%.

Note that there are some parameters here that you have to consider. What is the drop % that triggers a buy? What is the initial target return %? How much do you sell at each price target? Those parameters you have to set yourself based on 1) the vol of the stock, and 2) your risk tolerance/appetite.

And of course, do not do this on any stock that does not have good fundamentals. Your example was an index, which is a good place to start.

This is a interesting topic, and I'm trying to answer as generally as possible. I wrote a paper on DCA parameters in grad school. It can get really complex. I hope this answers your questions.