The clubs play tonight in their FA Cup Fourth Qualifying replay and they meet having just done business.
Wood chairman Danny Hunter detailed the arrangement and said two offers we knocked back before an agreement was reached.
“People may question why I have accepted the deal, but I feel every player does perhaps have a trigger price and at 28, Ángelo has his,” he said on the club’s official website.
“I also felt at 28, that it was only correct for Angelo to be allowed to talk to Dagenham, as the offer we accepted was substantial and the offer he received was also a considerable one.”
Balanta joins after top scorer Elliott Romain left to sign for Maidstone United.
Dagenham manager Peter Taylor said: “I’m absolutely delighted to have secured the signing of Ángelo Balanta.
“I’ve known him for a very long time, he was one of my players when I was at Wycombe in 2008 and he was just 18 years of age and just starting out at Queens Park Rangers.
“I have followed his career ever since then and I think he’s shown what a very good player he is in the National League and I am thrilled that we have brought in somebody of his quality.”