Why DCA Strategy

[Mkelgodson]

Dollar-Cost Averaging (DCA) is an investment strategy that is considered by many as a good and simple strategy, and widely in use by investors. It entails investing a given amount of money in a particular security for a given period of time regardless of price. Why most investors consider this strategy is a thing of curiosity.

You may want to know, it helps you develop self discipline (esp as a newbie) while considering the market and your tolerance to risk. Emotion can play a substantial trick in disadvantaging investment decisions. DCA can counter this impact.

Another good thing is that it lessens the impact of volatility as the total investment sum is spread over multiple purchases of the security.  This strategy can be very effective if employed during bearish market.

Lastly, the strategy can be applied in any crypto investment, bonds, stocks or any commodities. It's a fine choice! However, you can always stick to what is best for you as an individual.

[DoublerHunter]

~snip~
This strategy can be very effective if employed during bearish market.

^ The thing that I have known is that this is a very effective way of investing in potential crypto while there is a bearish market.
And that is definitely right, this investment method is like playing safe in the market, and if you don't know how to invest in the right position. Through this DCA way of investing you can manage your risk and possible minimal losses. This could be a good strategy if you are new in the market field.

[Mkelgodson]

Very well said DCA is an excellent strategy but the best thing that you have told very clearly is that it's an "Investment Strategy" some people use this strategy in their trading as well which is absolutely foolish.

I didn't mention"trading" at all.

[jossiel]

If it's not going to be working one for an individual, what would be the best for them? I don't think that there's other strategy that fits everyone's taste.

DCA is one of the best of it and it's very effective at these times.

Lastly, the strategy can be applied in any crypto investment, bonds, stocks or any commodities. It's a fine choice! However, you can always stick to what is best for you as an individual.

Yeah, not just to accumulation of crypto but also other investment vehicles.

[Oshosondy]

DCA is very good, but in crypto, not good to use it after a massive bull market, because there can be bear market for months just like what happened this year.  Anyone that DCA at the beginning of this year till now will really be sad until next bull market. It is good not to just invest at all at times.

Very well said DCA is an excellent strategy but the best thing that you have told very clearly is that it's an "Investment Strategy" some people use this strategy in their trading as well which is absolutely foolish.

I didn't mention"trading" at all.

@teosanru. OP did not mention anything like trading, he talked only about investment and DCA means of investing in particular. Probably you misunderstood the OP because he created the thread on trading board but he did not  about trading at all.

[tvplus006]

...DCA is one of the best of it and it's very effective at these times.

In order for the DCA strategy to be effective, it is necessary to properly allocate your funds for upcoming purchases, as well as correctly set the price at which you should start making such purchases. Otherwise, you will spend all your money, and the price will continue to decline and you will not be able to make next purchases.

[so98nn]

Yup it's always good strategy. For those who do not excatly understand the DCA and how it works then I am quoting some good points down here for the reference:

Dollar-cost averaging is the practice of systematically investing equal amounts of money at regular intervals, regardless of the price of a security.
Dollar-cost averaging can reduce the overall impact of price volatility and lower the average cost per share.
By buying regularly in up and down markets, investors buy more shares at lower prices and fewer shares at higher prices.
Dollar-cost averaging aims to prevent a poorly timed lump sum investment at a potentially higher price.
Beginning and long-time investors can both benefit from dollar-cost averaging. Check out here

So in short one can workout the DCA strategy in the volatile market such as the crypto. For example, if John wants to keep hold of his assets in the Bitcoin and do not want to trade it or get carried away in the world of chaos and ups and downs then he could plan for DCA strategy.
In this John simply makes a planner and sets his end goal such as how much money he wants to put in the Bitcoin?
Let us say John plans to buy two times in a month on 5th and 25th of every month. However John will always do this irrespective of the price of bitcoin on those dates. Now let us price of bitcoin on 5th was 1000 bucks and on the 25th it was around 1200 bucks. This way he will repeat the cycle every month and might do it over 2 years.
Due to volatility it is possible that bitcoin may go all the way from 1000 bucks (Starting cost when John started) to let's say 35,000 bucks by two year ended. However for John the cost would be average of every month later averaged with two years average. The final result would be such that he will be in positive investment as compared to those who bought at 35,000 k or who bought at 1000 k but kept selling and buying all the time. :-)

Definitely helpful strategy in the volatile world of bitcoin or other coins if you are proper planner and consistent with it.

[Hamza2424]

This is the best strategy to work with long-term accumulation and there are too many reasons to do DCA, It reduces risk on investment, it is more efficient in terms of the average price achievement for the total holdings in the sideways-moving market. It boosts the profit more than the regular spot entries. Everyone can use it according to the plan there is no minimum valuation. Long term investment should be focused with the DCA is per my experience all in is gambling.

[ajiz138]

The DCA strategy is a very simple practice for me to invest long term in Bitcoin. I always plan in a bear market because I take advantage of a good situation for this opportunity, regarding financial management it must be considered because I always spend money on investing in this DCA strategy every time. weekly with an allocation of $50/$100 depending on how I can make other money but I always try in this practice to always be effective in long-term Bitcoin accumulation, this is quite simple but it takes patience and also good money management.

[taufik123]

In practice, DCA also requires a large amount of capital if it wants to continue to do so, because at any price it will make a purchase. and the assets purchased are mostly for the long term. This strategy is indeed very effective to continue to collect assets for a certain period of time on a regular basis and it will be better when there is a bearish occurrence because there will be more assets owned but at a cheaper price.

In the DCA Average strategy, purchases will be known by making a portfolio of how many assets have been purchased. The DCA strategy is perfect for those who want to continue to collect bitcoins or other assets for the long term on a consistent basis.

[sheenshane]

In the DCA Average strategy, purchases will be known by making a portfolio of how many assets have been purchased. The DCA strategy is perfect for those who want to continue to collect bitcoins or other assets for the long term on a consistent basis.

I tend to agree with this, it's a kind of hoarding Bitcoin for the long term and this investment strategy is suitable for those who are afraid of always losing the value of the money invested and aim for profit in the long term purpose.

How many of us here experience this kind of experiment in a way of purchasing Bitcoin?
Instead of buying all at once, purchasing in a DCA way couldn't also hurt your pocket if the bear market will continue.  Additionally, the advantage of this could be a risk reduction which provides liquidity and flexibility in your portfolio and prevent bad timing when the market continue declining the price.

[jossiel]

...DCA is one of the best of it and it's very effective at these times.

In order for the DCA strategy to be effective, it is necessary to properly allocate your funds for upcoming purchases, as well as correctly set the price at which you should start making such purchases. Otherwise, you will spend all your money, and the price will continue to decline and you will not be able to make next purchases.

Just allocate depending on your budget, whether it's tight or not.

As long as you're doing the DCA based on how free you can do it and the most important matter of it is that you're consistently doing it because that's what it should be.

That's the good thing in DCA if you bought now and then suddenly price fell, you can even enjoy it more to buy at the dump.

[GreatArkansas]

In the DCA Average strategy, purchases will be known by making a portfolio of how many assets have been purchased. The DCA strategy is perfect for those who want to continue to collect bitcoins or other assets for the long term on a consistent basis.

I tend to agree with this, it's a kind of hoarding Bitcoin for the long term and this investment strategy is suitable for those who are afraid of always losing the value of the money invested and aim for profit in the long term purpose.
(...)

And Dollar Cost Averaging (DCA) is one of the doings of a lot long term Bitcoin believers because if you are doing Dollar Cost Averaging (DCA) you will not enjoy profits in the short term as you cannot guarantee that for every buy you execute it will immediately pump.
So, you need to be patience too if you want to adapt Dollar Cost Averaging (DCA).

[pawanjain]

Ofcourse DCA is one of the best strategies out there. It is one of the simplest strategies which is consistent enough in giving profits.
Obviously we have to make sure we are doing the DCA properly not buying more around the same price.
Buying the dips and waiting for the price to go above your average price is when you know you have executed the strategy right.
The best thing about this strategy is that even an absolute beginner can do this without prior experience to trading.

[Franctoshi]

One very important key thing about DCAing in Bitcoin or crypto investment is that it will help you to get any crypto at good price without missing out the overall price movement of that particular crypto and too for someone that is new into crypto, dollar cost averaging is a powerful too for the investor to use as the new investor is yet to understand the fundamentals and technical analysis of a digital asset in order to know when buy or sell.

[Zilon]

Another good thing is that it lessens the impact of volatility as the total investment sum is spread over multiple purchases of the security.  This strategy can be very effective if employed during bearish market.

DCA doesn't lessen volatility impact completely. It can be useful for wide spread of multiple purchases but at the end it doesn't guarantee any short term security because volatility is a two way mechanism, it's either pumping or dumping and sometimes it moves faster than imagined.

Lastly, the strategy can be applied in any crypto investment, bonds, stocks or any commodities. It's a fine choice! However, you can always stick to what is best for you as an individual.

Undoubtedly DCA is the best strategy for digital assets and investments but it also requires discipline because no strategy is 100% efficient. With every strategy lies hidden strategies. Knowing how to use DCA to one's advantage especially when the market moves in opposite direction is also a plus.

[stomachgrowls]

One very important key thing about DCAing in Bitcoin or crypto investment is that it will help you to get any crypto at good price without missing out the overall price movement of that particular crypto and too for someone that is new into crypto, dollar cost averaging is a powerful too for the investor to use as the new investor is yet to understand the fundamentals and technical analysis of a digital asset in order to know when buy or sell.

Even if we  do speak about DCA, it wont really still guarantee out that it would turn out to be simple because emotions will really be your primary enemy on this one aside on finances.

You might have the money but you would really be bothered if you should really be buying or wait further?There's no such thing about easy even with DCA strategy.Aside from financial capability.

You cant really be always that confident on doing such action.Yes, this is really that sensible if you are really that going for long term but always be considerate
that you should really make yourself aware with the risk because not everything would turn out to be positive in the end years to come.

[taufik123]

-snip-

But keep in mind that the risk will still occur. because the market has high volatility, the loss of value will be experienced more quickly when the market is going down. This will also test how strong the resilience of your capital is. investment for long-term goals with a DCA strategy will also be maximized if it is balanced with the amount of reserve money and management that is carried out as I mentioned earlier.

Risk reduction that provides liquidity and flexibility to the portfolio will be more secure when the market is crashing. and keep in mind also that psychology will also play an important role, so never leave the initial strategy and change course. do it consistently and wait for the profits to arrive it will be good for the future.

[dothebeats]

It just helps you lower your entry price. It's one of the things that you could do to help manage your bankroll smartly, and it's been proven to 'work' most of the time since you're spreading out your buys over time that helps you collect more value in your stash too. It's what I did for the past few years and it helped me get as much bitcoin as I can over time without having to worry about the prices that much. Managed to came out on top a few times over with what I put in, and I'd do it again even if it takes years to take profits.

[crwth]

For people who don't know the idea of DCA would probably see it as a thing of curiosity, but once they have known the fundamentals of it, then they would understand why a lot of people start to use it for investing and continue to do it for a long time no matter what the cycle of the market is.

I think it's not just during the bear market but also the bullish one, depending on the duration of it. If you believe in what you are investing in, you should continue it and manage your risk.