How DCA Could Have Prevented Your from Losing More

[so98nn]

. . . and how many of you think that they are really using it? Do we using it on the regular basis. The DCA is not even practiced on regular basis and only considered by the experienced. I mean what would I do as general average trader while using bitcoin and transactions to the dollar? Why would I go on research on the same if Im just able to convert coins quickly whenever I need them. I dont even bother at looking the dollar conversion to my local currency because if I need the money then surely I need it, I wont be stopping for the prices to move to good terms right?

Unfortunately while DCA being one of the most effective strategies for non market pros, it's probably the most boring method hence why most people don't want to do it. People get really addicted to the adrenaline rush of getting in and out of positions, not knowing that most of them are just basically gambling because they're doing things blindly.

https://dcabtc.com/

Couldn't agree more. But it's also a fact that DCA is for position traders (those who prefer long positions). Definitely not for scalpers, day traders, and swing traders. But ultimately, it's not the technique that would cause you to lose more but taking risks you can't manage and spending more than you can afford. 

Yeah, that explains. For traders.
As far as bitcoin is considered most of the users fall under general transactors whose using the bitcoin to trnasfer money here and there. Play games, gamble it, store it etc.

[mk4]

I'm gonna go old school and just say word up to that, buddy.  I've never looked into the advantages of DCA investing, but I've done it with retirement accounts in the past where money was taken out of my paycheck every week.  

For the crypto market, though?  I don't think a lot of folks on this forum do it, either because they don't have the discipline or simply don't have enough money on a regular basis to plow into bitcoin or whatever altcoin they're into.  I mean just take a look at all the obviously desperate bounty hunters there are, working for shitty tokens that might be worth nothing (assuming they even receive them at the end of the bounty period).  I have a feeling they're trying to earn crypto to buy basic need items and probably aren't building a crypto stash.

With respect to this most recent crash, I'd point out that dollar-cost-averaging would only protect you if your average purchase price was less than $30k or so, and it won't always prevent you from "losing more".  You can actually lose everything depending on what you're investing in.

I mean yea, the "DCA gud" narrative obviously doesn't work for literally everything as it will also depend on what asset you're actually buying. But then again — assuming that the asset you're buying is actually decent, you're likely to win given a long enough time frame (probably 5 years minimum to be safe).

As for the so-called "bounty hunters", yea I wouldn't really put them under the "investor" umbrella in the first place.

[laredo7mm]

Brother trust me in a bear market all of your liquidity will be drained if you do DCA. I know this because I have done it. Every month price of my project making new lower low and I can not do anything but put more money into it. Actually, I am trapped with those projects. So it will be best to wait for most of the major coins to dump over 80% from their ATH after a bull season and then start accumulating coins.

[coolcoinz]

Brother trust me in a bear market all of your liquidity will be drained if you do DCA. I know this because I have done it. Every month price of my project making new lower low and I can not do anything but put more money into it. Actually, I am trapped with those projects. So it will be best to wait for most of the major coins to dump over 80% from their ATH after a bull season and then start accumulating coins.

Say you actually DCA for some time, but don't want to do it in a bear market. How do you know where the bear market starts and where it ends? Take the last 12 months. The price went to 60k and down to 30k. Was that a bear market, a place where you should stop DCA? Actually no, although we were down 50%. Then we went up again and down to 40k. Was that the beginning of a bear market? Many traders argue that it was, but we were still higher than the lows of 2021, where buying was actually the right thing to do.

My opinion is that it's so hard to predict whether it's a bear or bull market with bitcoin that it's better to either DCA or wait for 50% drops to start buying and then either hold as long as you can or start slowly selling when you're up 50% and keep going the same exact way that you'd accumulate with the DCA method, just the other way round, selling 10% of your holdings every month until it crashes again.

[laredo7mm]

Brother trust me in a bear market all of your liquidity will be drained if you do DCA. I know this because I have done it. Every month price of my project making new lower low and I can not do anything but put more money into it. Actually, I am trapped with those projects. So it will be best to wait for most of the major coins to dump over 80% from their ATH after a bull season and then start accumulating coins.

Say you actually DCA for some time, but don't want to do it in a bear market. How do you know where the bear market starts and where it ends? Take the last 12 months. The price went to 60k and down to 30k. Was that a bear market, a place where you should stop DCA? Actually no, although we were down 50%. Then we went up again and down to 40k. Was that the beginning of a bear market? Many traders argue that it was, but we were still higher than the lows of 2021, where buying was actually the right thing to do.

My opinion is that it's so hard to predict whether it's a bear or bull market with bitcoin that it's better to either DCA or wait for 50% drops to start buying and then either hold as long as you can or start slowly selling when you're up 50% and keep going the same exact way that you'd accumulate with the DCA method, just the other way round, selling 10% of your holdings every month until it crashes again.

I have already mentioned in my first post how to identify one. In a bear market price of most coins will gradually create a lower low. Yes, you could see some recovery after every crash but it will crash repeatedly. This is how a bear market reacts. It is not that hard to identify a bull or bear market and in every bear market, most of the coin prices went below 80% of their ATH. You can check that by yourself.

[coolcoinz]

I have already mentioned in my first post how to identify one. In a bear market price of most coins will gradually create a lower low. Yes, you could see some recovery after every crash but it will crash repeatedly. This is how a bear market reacts. It is not that hard to identify a bull or bear market and in every bear market, most of the coin prices went below 80% of their ATH. You can check that by yourself.

So, according to you, was the May and June 2021 a bear market? We had a low of 45k on May 12, 42k May 15, 30k May 18, 28k Jun 20 = gradual lower lows.

I don't agree with you, it's really hard to identify a bull or a bear market in cryptocurrencies. Most people identify it long after the fact.

If we are at these 80% bear market crash predictions, what are your thoughts about bull market highs? I agree that we had these ~80% pullbacks in 2014 and 2018, but those bull markets were also much different with over 1000% gains. This time, for the first time in history, the bull market (at least that's what people call it) ended with the smallest gains ever of around 350%, which is barely a third of what the previous bull markets were able to deliver.
I feel like we should compare highs and lows of the cycle instead of focusing on one side of the story.

[Cookdata]

This kind of Model can only work with bitcoin, if you try to do dollar cost average with altcoins, you will bleed the hell out of your capital and you know what happens to altcoins in every bear market, almost all of them don't make it back to the next bull run and as a result, you get stuck with the worthless token.
I use to hear they say millionaires are always made in a bear market, do that with bitcoin and continue to stack some bitcoins the moment it starts doing lower high on the weekly time frame, you will enjoy the time it goes out of the bear market and if you do it properly, you should be even with your investment before the new bull run begins.

[odolvlobo]

I haven't heard of this strategy, I believe, but I fail to grasp how this is better than other things.

DCA makes the basic assumption that the asset's value will rise over the long term. So, you invest regularly whether the price is higher or lower, believing that eventually it will go higher. DCA reduces your urge to speculate, which has been shown to give worse results.

Why isn't it better to wait till the price is quite down (say, at least -30% from the ATH), and invest $10k then? It would mean buying more BTC than if a person buys when the price is high.

It isn't better because the price might rise instead of fall. You are making the assumption that you can somehow predict the price movements. The reason that you invest the same amount at regular intervals is that you don't really know where the price is going in the short term, but you believe the price will be higher in the long term.

This kind of Model can only work with bitcoin, if you try to do dollar cost average with altcoins, you will bleed the hell out of your capital and you know what happens to altcoins in every bear market...

DCA is a long term investment strategy. If you know that an altcoin is going down in the long term, you shouldn't invest in it for the long term.

In a bear market price of most coins will gradually create a lower low. Yes, you could see some recovery after every crash but it will crash repeatedly. This is how a bear market reacts. It is not that hard to identify a bull or bear market and in every bear market, most of the coin prices went below 80% of their ATH. You can check that by yourself.

Anyone can identify a bull or bear market afterward, but you can't know how long it will last ahead of time.

"In every bear market, most of the coin prices went below 80% of their ATH" is not a very good indicator. You miss out on coins that don't lose 80% and many coins that lose 80% never recover.

[laredo7mm]

I have already mentioned in my first post how to identify one. In a bear market price of most coins will gradually create a lower low. Yes, you could see some recovery after every crash but it will crash repeatedly. This is how a bear market reacts. It is not that hard to identify a bull or bear market and in every bear market, most of the coin prices went below 80% of their ATH. You can check that by yourself.

So, according to you, was the May and June 2021 a bear market? We had a low of 45k on May 12, 42k May 15, 30k May 18, 28k Jun 20 = gradual lower lows.

I don't agree with you, it's really hard to identify a bull or a bear market in cryptocurrencies. Most people identify it long after the fact.

If we are at these 80% bear market crash predictions, what are your thoughts about bull market highs? I agree that we had these ~80% pullbacks in 2014 and 2018, but those bull markets were also much different with over 1000% gains. This time, for the first time in history, the bull market (at least that's what people call it) ended with the smallest gains ever of around 350%, which is barely a third of what the previous bull markets were able to deliver.
I feel like we should compare highs and lows of the cycle instead of focusing on one side of the story.

In a bull market, it is the opposite. Most of the projects made multiple X within a month. This time we saw the ROI is lower because the market becomes bigger. Do not look at the ROI instead look at the amount of volume or money inflow in this bull season compare to the previous one. You will be this number is getting higher in every bull season. I am also sure in the next bull season we will see multiple X cash inflow than this season but the ROI will be smaller than this season. This is the nature of crypto. The more mature the market will become the less volatile it would be.

[coolcoinz]

In a bull market, it is the opposite. Most of the projects made multiple X within a month. This time we saw the ROI is lower because the market becomes bigger. Do not look at the ROI instead look at the amount of volume or money inflow in this bull season compare to the previous one. You will be this number is getting higher in every bull season. I am also sure in the next bull season we will see multiple X cash inflow than this season but the ROI will be smaller than this season. This is the nature of crypto. The more mature the market will become the less volatile it would be.

This is a good point. If we assume that it's true and market becomes more mature with more inflows every time but lower volatility, why do you also think that over 80% drops will continue? These two assumptions contradict each other.
Also, the more mature the market the better for people who DCA because the spread is going to be smaller and so will the risk.

[Bitstar_coin]

If you are investing during the bear market you can easily buy everything in a lump sum by taking advantage of the cheap price. I think dca is most effective when you invested during the bull market, those who bought high last year have the opportunity to dca now that the price is down. But some investors don't usually dca when price is down because they feel frustrated with the price and would rather sell and leave than dca. This is a great strategy but not everyone will apply it.

[ChiBitCTy]

Unfortunately while DCA being one of the most effective strategies for non market pros, it's probably the most boring method hence why most people don't want to do it. People get really addicted to the adrenaline rush of getting in and out of positions, not knowing that most of them are just basically gambling because they're doing things blindly.

https://dcabtc.com/

I don't think this is necessarily the case.  Most of my clients dollar cost average by default, as with retirement plans you've normally got money coming in to your plan from your work paycheck every two weeks, so by nature they are dollar cost averaging and not even knowing it.  Now if we are talking about outside of your normal retirement plan investing, then I would probably agree with you.  But I think most of those times are simply people placing trades when they have the money to do so versus trying to time things.

[Mahanton]

If you are investing during the bear market you can easily buy everything in a lump sum by taking advantage of the cheap price. I think dca is most effective when you invested during the bull market, those who bought high last year have the opportunity to dca now that the price is down. But some investors don't usually dca when price is down because they feel frustrated with the price and would rather sell and leave than dca. This is a great strategy but not everyone will apply it.

If you do let your emotions control you then you would really be ending up on a panic selling kind of decision where you wont tend to make use of those DCA strategy which is really something that do really patch up
on what you had lost when you did invest on a bull market but somewhat not all does have the finances on doing so thats why they dont really have any choice but to panic sell or cut loss then buy into the current
price and hope that they would make profits on the time the market recovers which i could say a totally absurd kind of decision.

[BRINIRHA]

maybe this method is what i need. i am new to crypto trading. I will learn more about this DCA method.
like this can minimize mental pressure when prices fall. because it will open up new opportunities to buy again at lower prices.

[Tony116]

This kind of Model can only work with bitcoin, if you try to do dollar cost average with altcoins, you will bleed the hell out of your capital and you know what happens to altcoins in every bear market, almost all of them don't make it back to the next bull run and as a result, you get stuck with the worthless token.
I use to hear they say millionaires are always made in a bear market, do that with bitcoin and continue to stack some bitcoins the moment it starts doing lower high on the weekly time frame, you will enjoy the time it goes out of the bear market and if you do it properly, you should be even with your investment before the new bull run begins.

In a bear market to secure your portfolio bitcoin is the perfect choice but not all altcoins will turn into shitcoins in a bear market. During the bear market, most altcoins will drop a lot sometimes 80%, 90% of the value so this will be an opportunity for us to own them cheaply but make sure to always do your research before deciding to buy and accept the risks it can bring to us. The DCA strategy is really an effective pattern when a bear market occurs. DCA will help us accumulate assets cheaply and just patiently hold on to the bull season and our profits will increase significantly.

[justdimin]

I don't think this is necessarily the case.  Most of my clients dollar cost average by default, as with retirement plans you've normally got money coming in to your plan from your work paycheck every two weeks, so by nature they are dollar cost averaging and not even knowing it.  Now if we are talking about outside of your normal retirement plan investing, then I would probably agree with you.  But I think most of those times are simply people placing trades when they have the money to do so versus trying to time things.

This is basically what I am doing, my salary is monthly hence why I put money in my crypto accounts once a month, and I have been doing that for a while and it is a great feeling, but the reality is that it is not going to be something special, I am not going to be able to retire and be super rich by the time I am 60 because of 2 reasons.

First of all, the economy is getting so bad that, I would be shocked if I do not cash out all of my money eventually, it is quite possible that I would be selling it all and paying some debts or try to survive because our economy could crash any moment and I would have to pay x10 more for food very soon. Secondly, I am not putting "that" much money in it.

[Quidat]

I don't think this is necessarily the case.  Most of my clients dollar cost average by default, as with retirement plans you've normally got money coming in to your plan from your work paycheck every two weeks, so by nature they are dollar cost averaging and not even knowing it.  Now if we are talking about outside of your normal retirement plan investing, then I would probably agree with you.  But I think most of those times are simply people placing trades when they have the money to do so versus trying to time things.

This is basically what I am doing, my salary is monthly hence why I put money in my crypto accounts once a month, and I have been doing that for a while and it is a great feeling, but the reality is that it is not going to be something special, I am not going to be able to retire and be super rich by the time I am 60 because of 2 reasons.

First of all, the economy is getting so bad that, I would be shocked if I do not cash out all of my money eventually, it is quite possible that I would be selling it all and paying some debts or try to survive because our economy could crash any moment and I would have to pay x10 more for food very soon. Secondly, I am not putting "that" much money in it.

As long you could able to take the risk and invest on the money that you could afford to lose then I don't see anything bad with the decisions that had been made.We do have different perspective in life and towards on things that we are involved with and as for DCA then if your finances do permits you then this is something which is preferable but not all does have the capital on doing so thats why most of the time we do really miss out good opportunity on making profits on the time of reversal.

[niceli]

I basically did DCA from very low amount until 2020 or so and that allowed me to drop the average from 2017. I had some from 15k+ range, and dropped that to 5k and then even increased it to 10-11k range as well by DCA but gained a lot more amount. This allowed me to be in profit even when it was 25-26k recently, and definitely a lot more in profit when it was 60k+ as well. I am not going to sell unless I absolutely need to.

[sovie]

Unfortunately while DCA being one of the most effective strategies for non market pros, it's probably the most boring method hence why most people don't want to do it. People get really addicted to the adrenaline rush of getting in and out of positions, not knowing that most of them are just basically gambling because they're doing things blindly.

https://dcabtc.com/

and needs a lot of patience. For a person like me who is very impulsive this DCA is not successful.
DCA is good for those who have patience - who can wait and invest. I need to do some exercises to be calm and then start investing.

[kaseygriffin]

If there is a specific plan, it does not matter whether or not DCA is so important, because each person will have a different approach to assessing the individual financial markets they study. As I am passionate about feelings, if background knowledge is required to talk about an investment strategy that will always bring profits in the future, it is clearly possible for the really wealthy and even for those who can balance income expenditure as well as profitable investment. And over time, if we experience more and correct the mistakes we made, profits will certainly come as a matter of course.