You should enable 'Save Backup Daily' to enable automatic backups.
You should also set the maximum number of backups to be stored.
Below this, you can choose where your backup files are stored.
By default, the backups are stored in the default location. This location is easily accessible from Moneydance by choosing Help > Show Backup Folder.
You can amend this location to any location you prefer to use.
Once amended, the new location will be accessed when you choose Help > Show Backup Folder.
Each time you close your data file, a backup file will be created at the specified location. Once the set number of backups exist, each file will be updated in turn.