Bitcoin Forum

Hi Everyone!

I hope you're all having a great week. I just published an article on dollar-cost averaging which I think would be a great read for many of the traders here. It provides a simple way to consistently add additional funds into your portfolio.

I would love if you could take a look and let me know what you think!

https://blog.shrimpy.io/blog/dollar-cost-averaging-for-cryptocurrency-portfolios

Simple yet another way to manage portfolio easily and reducing risk. Its hard to manage portfolio specially during bearish season, this method could work if you want to accumulate slowly without breaking your bank in a single time.

Definitely something that newer traders need to get to grips with. The great majority of beginner traders end up getting rekt simply because they go all in at a certain price point, and then sell out near the bottom.

By using dollar cost average (DCA) to average out the investment price, they are unlikely to ever really be hit with that FUD that will force their weak hands to sell out.

$10 a week for a year is far better than $500 at once, in terms of risk/safety profile.

I saw the article but didn't read it whole, it seems like also advertising beside explaining the Dollar Cost Averaging (DCA), but it's okay.

Dollar Cost Averaging (DCA) is really advisable, a lot of traders also telling about this, especially when you will use those BTC for trading (risky also). But overall, if you want just to HODL some Bitcoin, then it is still better.

Just always remember, be patient, wait for the slightly perfect entry. It is difficult to get in perfect entry, that's why Dollar Cost Averaging (DCA) is the best way.

I visited and read some of your content in the url you have given. A great help to those who wanna handle their portfolios and want to integrate some strategies on how to regularly check when likely to buy your bitcoin.

Seems like DCA (Dollar cost averaging) can be useful to prevent such mistakes especially to those portfolios that has a poorly management when it comes to their asset or invesments.

I like the idea of you article showing some real calculations if we decided to do some DCA. That will be a great step to build a strong portfolio while gaining.

It's a well written article about DCA. However, DCA is not really a trader's thing. Rather it's for investors! It usually works best in played in longer terms! This method is also known as SIP or Systematic Investment Plan in real world stock market.

 But I am little skeptical about its effectiveness in crypto market because there isn't any dividend options available! In stock market, we get dividends and various share issues like split, bonus and other corporate actions. This is not the case in crypto! It might help investors to keep the investment risk below the belt, but the volatility may eat up the profits no matter how good your portfolio looks like!

Credits for the effort. But this is the cryptocurrency universe. The basis is Bitcoin or Satoshi. When crypto trading is done, it should not be the USD that the trader is looking into. That is not the right basis. It should be Bitcoin. If you buy an altcoin at 1,000 Sats, you should sell it at a price higher than 1,000 Sats, regardless of its dollar price.

If you will trade crypto basing on the USD price, you better not proceed. You may buy the same altcoin at 1,000 Sats and sell it at 800 Sats and be happy about it because the price of BTC is rising, therefore the price of your altcoin in USD is also rising, but forgetting that you are actually losing in your trade.

You are reading it too far.... I have been dollar cost averaging pretty much since 2015 with some breaks every now and then, and it worked out extremely well looking at where we are today.

What impact did the volatility have on me? Zero. It's a long term game, which you seem to acknowledge as well---volatility is a concern when you are short term minded, but then you don't get to benefit from dollar cost averaging....

As for dividends, I honestly have no idea why you even bring that up since you know we're talking about crypto here.... it technically doesn't even have to do much with stocks.

It is not always easy to have enough funds to dollar cost average your portfolio, so if the bot is working as expected then it needs new money involved time to time, it all depends on the user of course but there has been a lot of bots during the 2018 bear run time that used this DCA and did it worked? Sure, the idea worked but not everyone had enough money to DCA their positions.

Some of them had predetermined numbers for their portfolios like you did, for example 20% btc at all times which meant when new money came in it arranged it accordingly, some however did " buy from the biggest drops first" to DCA the worse losers and that worked too. All of it works, idea is perfect, yet when someone doesn't have new funds all of it goes to waste and can't be even used.

Nice strategy although traders with big portfolio size would benefit more. Traders with small funds can use the strategies as it involves "injecting" more funds from time to time to cut risk.  Quick question, I saw your other thread about Shrimpy's Charting and I liked it. I want to know what your platform is about. I'm a new trader and I like what I saw. Thanks for the tutorial though. I'm sure someone might find it useful.

Good article, you also understand about the DCA concept, which is use margin trading. I often use these methods to reduce risk and avoid losses, by dividing our investment into several places. After that we see the market situation, if there are weaknesses in the conditions of prayer one place we can outsmart it to another with a margin. In my opinion this is a bit difficult because we have to really know about the market and who dominates and who is weak in the market.

Thanks for asking! Shrimpy is a portfolio management application which focuses on simplifying the way people manage their cryptocurrency. Instead of spending a bunch of time day trading, Shrimpy focuses on automating simple long term strategies which have a strong track record. For example, you can quickly index the market, allocate a diverse portfolio, rebalance, and dollar cost average into portfolios. Along the way we have been building other trading tools as well to help developers. Let me know if you have any other questions! I'd love to dive into more detail about Shrimpy.

Cost averaging is a basic concept of investing and is a great way to build a portfolio whether you are buying crypto or not. There are some who would say that costa averaging is for dummies who don't want to make the effort in learning and timing their buys, and i somewhat agree.

It's good to cost average, but it's even better if you can cost average at the right times, especially in crypto/bitcoin (buy the dips - don't buy the pumps).

Thanks for this information.

I'll look into using dollar-cost averaging for my portfolio!

Yes, Dollar cost averaging will be the best idea for the people who are trying to enter into bitcoin now. If you see the growth it has reached from few cent to thousands of dollar. At this stage if might be volatile and to be frank its is volatile. It recently touched 14 and came back to 7K. Considering the long term goals in bitcoin. Its better one goes via Dollar cost averaging model.

If you are looking for platforms that allows to do it in easy and automate ways then use https://bitdroplet.com/.

https://bitdroplet.com looks pretty neat

I just started my portfolio 3 days back


https://ibb.co/tXqKv2n

It's performing well.

BTC let's go to the moon

Very good article but as a trader, I'm not into averging technique IMO because it doesn't always work in a market specially in a continuous bearish market. It can cause you put all of your capital into a market which will recover in a long period of time which is tedious for a trader and unproductive at the same time. Not to mention if it'll go back again to the price on where you bought it or even surpass it after the declination on its resistance.

This article is interesting and I appreciate the average DCA tool for each time you perform. this will greatly reduce the time of the fund holder and will certainly make it easier for many individuals to manage transactions.
In the past, I used to be very bad at calculating and it took a lot of my time when I started to deposit more money into my account and didn't know what to do with the numbers and how to divide it evenly. Hope this tool is easy to understand and use.