In my opinion Lump sums outperform DCAs in terms of profit, but only if you time the market correctly, which is frequently an issue because timing the market accurately is difficult most of the time. So it's better to DCA regularly than try to time the market, which usually fails. DCA provides piece of mind because you do not rush to buy (FOMO) or panic sell when prices fall. It's similar to an automation bot that buys when prices spike or fall.
When you start waiting for a specific price, you're no longer performing DCA; you're a market timer. There is nothing wrong with market timing; the concern is that you may miss out on dips that never appear or freeze when the drop does occur.
Yes, basically, any buying strategy is clearly good when applied to Bitcoin. Because, if held long-term, any strategy will certainly be very good. So, whether you choose the lump sum or the DCA technique, I think it's up to each individual and depends on your financial situation. If you can afford to buy Bitcoin all at once, then do so; there's nothing wrong with that.
If you can't afford to buy Bitcoin all at once,, then the solution is to buy using the DCA technique. So,, the bottom line is, there's no need to worry. The most important thing is to hold it long-term. I believe that's the most important thing in Bitcoin investment. However,
I don't recommend waiting for the price to drop before buying if you use the lump sum technique. I believe buying immediately when you have the money is better.
Buying on the dip and lump sum is different.
The mere fact that a person uses a lot of money to buy on the dip does not convert buying on the dip to lump sum.
Oh, and by the way, it is not too common that anyone can buy their whole stack at once, even if they have a lot of money. Many times, even guys who have a lot of money, they may well have to figure out how they are going to buy as the money comes available, and sure there may be guys who have so much money that they don't even care, yet most people do want to give some thought to how they end up buying, even if they have a lot of money to work with.
I frequently suggest that whenever anyone has a lot of money that comes available at various points in time, they should at least consider their three options for that money, which is 1) buy at once, 2) defer by time (DCA) and/or 3) defer by price (buying on dips that might not happen). At the same time, a person might have lump sum amounts come available, but also have regular income coming in, which he can also supplement whatever he decides to do with his lump sum available amount with whatever amount that he might choose to DCA while he is ultimately establishing his bitcoin position, and anyone should probably also consider their
9 individual factors (which may also be changing with the passage of time, too).
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Even if a newbie can afford to buy all at once it will be more encouraging to say that they should buy with DCA because they are less experienced, going all at once even while they can afford it for newbies might not really make sense especially when they will see the market going down after they must have bought, don't forget that they are new and has less experience of the market but DCA newbies are put in place where they are gaining experience and slowly investing their money and their confidence will be growing as well, going all at once which is Lump sum is good but for a newbie DCA should be adopted primarily.
To me, it seems problematic to believe that merely because someone is a newbie that they should not consider their three buying options, which is 1) buy right away, 2) DCA and/or 3) buy on dips that might not happen.
They have the ability to consider any and/or all of the three methods of buying, especially if they already have the money.
Sure, they might fuck up, yet from my perspective, there is no reason to presume that they are going to fuck up merely because they are a newbie to bitcoin. Now, if you happen to know something about such newbie, then perhaps there might be some specific information related to that newbie that you might want to advise, yet if we are presuming normal people to have common sense, then they should be able to figure out to adjust their starting size to their level of knowledge and/or their level of comfort. I don't disagree with the idea of starting out slow and getting used to the matter, yet I am not going to presume that a newbie has to limit themselves to DCA, especially if they may well have lump sum amounts available to them. If the person has no lump sum amounts available to them for investing into bitcoin, then surely it seems that they would be stuck with DCA since they would ONLY have discretionary funds coming available as their income comes in.
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You seem absolutely certain, saying this.
"Sometimes, a price drop does not occur instead, the price continues to rise". In my opinion, this kind of mindset is truly very misleading for those who are just starting to learn about and accumulate Bitcoin. It would be better to share something informative rather than just spouting off like that, wouldn't it? You should point out that Bitcoin is highly volatile therefore, beginners looking to invest in it need to understand this fact unlike the misleading statements you made.
And the second piece of misleading information,
Waiting is not a bad thing when it comes to accumulating our investment assets. In my opinion, regardless of your Bitcoin accumulation strategy whether it involves waiting or buying immediately the bottom line is that both approaches are profitable if we hold the asset for the long term. Every investor has their own style when it comes to accumulation; the most important thing is to remain consistent in accumulating those assets.
When it comes to bitcoin investing, getting started is better than waiting. Sure normie newbies can chose to wait, since it is their choice, but waiting is not as good as getting the fuck started... and start as soon as they figure out that they have enough discretionary funds. They can work out the other details as they go, including strengthening their cashflow management systems/practices, to the extent that their cashflow management systems/practices may well need strengthening.
Another reason why It's highly recommended for newbies is to help control their emotions during dips, most newbies find it tough during such period which mostly leads to wrong decision making out of panic but with the DCA they'll see the dip as an opportunity than a disappointment
Controlling your emotions have nothing to do with either you are accumulating through the dca accumulating strategy or not, it's more of investing with what you can afford to lose or investing with your discretionary income, because if you are not accumulating Bitcoin from your discretionary income, which is a fund you can afford to lose, you will likely panic, and selling prematurely anytime their is a strong dip in the market because it's what you cannot afford to lose.
But if you are investing with what you can afford to lose, nothing will shake you because you know that even in the worst possible scenario, you will still be fine, unlike when you invest with what you cannot afford to lose.
If you can be able to control your emotion especially during a dip it will help you not to panic and then sell your bitcoin. The main reason why most investors end up selling there bitcoin when they are not planning to is because they failed to control there emotions and they take impulsive decisions by selling, sometimes they do sell at loss . So it is important for an investor to be able to control there emotions in other not take the wrong decision as regards there bitcoin investment during bearish season.
A good way to control emotions is by putting strong cashflow management practices in place and to temper the amount of bitcoin that is bought weekly (or whatever the time period) based on the discretionary funds that are available and the strength of the back up funds. Of course, there is nothing wrong with also attempting to have decent understanding of their
9 individual factors, and even though they might not need to have a great grasp on all of their 9 individual factors at the time they start to invest into bitcoin, they can ongoingly work on improving their understanding of their 9 individual factors, which also will likely help them in their abilities to control their emotions.
I have frequently suggested that if any of us can put strong financial management in place then it is quite likely the strength of our psychology will improve.
You can’t tell people not to combine strategies. Ultimately, each investor is free to choose the approach that best suits them. Yes, We do encourage people to go for DCA as it seems to be the most effective and sustainable approach to accumulating bitcoin but there are times or situations where an investor might have extra money and might want to lump sum immediately depending on his decision as to what he’s perceived to be a good or favourable time. He can still continue with his DCA afterwards.
Also, Practicing DCA consistently, you’ll be opportuned to buy at the dip from time to time without actively chasing the dip.
If you look at it holistically you’ll find that you can’t only use DCA to buy bitcoin, a good mix with DCA as the primary strategy is best.
Not at all but it must be what works efficiently, the DCA method allows us to buy at all time without minding anything, personally I support the combination of strategies and it should be the way you explained it, for me DCAing without aggressiveness as we go along is sometime I don't like, although I understand that aggressiveness has to do with the level of our discreationary income if I'm not mistaking,
Your level of aggressiveness is completely within your choice. You can choose to be whimpy, aggressive or somewhere in between.
The amount of discretionary funds that you have gives you guidelines in regards to the limits of how aggressive that you can be, yet you still choose within your discretionary funds amount how aggressive you want to be based on your own preferences and your balancing of various wants and/or needs that you have both related to bitcoin and related to other aspects of your life.
as for the lump sum, I don't think there should be an exception to that, as individual investors we have our targets and for us to get close or reach our target different steps had to be taken to get there, there nothing wrong in lump suming as long we have the amount available at anytime.
Many times people do not have lump sum amounts that are available to them, yet if we are paying attention, there may be funds that we can make available and also from time to time, we might have extra funds that come available in our lives based on our just engaging in our regular activities, which might be working to earn income and/or other ways that we might figure out how to earn or receive income.
If extra money comes available for investing, based on our receipt of such money or based on our making the money available, then we may well have choices about whether we authorize the money to be allocated towards bitcoin investing and/or towards savings (back up funds) and/or towards discretionary consumption.
Saying "a good mix with DCA as the primary strategy is best." Is supposed to be your personal opinion, not fact.
The whole purpose of DCA is to remove the need to decide when the market is favourable.Once an investor start adding other strategies, they are moving away from the discipline that makes DCA effective in the first place.
Also, while DCA might result in buying during dips occasionally, it should be as a result of consistent investing, not a reason to combine DCA with attempts to time the market.
For long term Bitcoin accumulation, a simple and consistent DCA plan is enough. There is no need to complicate it by trying to guess when the market offering the best buying opportunities
There's no rule that say you must stick solemnly on DCA method of accumulation overtime till you reach your bitcoin target. Who told you that if you mix buying the dip or lump sum with your ongoing weekly DCA means you are not discipline and your regular weekly buying with your discretionary income wouldn't be effective on your bitcoin portfolio.
This is where newbies get it wrong. Using only one strategy which is DCA cannot outperform some one who's mixing buying the dip with his regular weekly DCA, because he will have the opportunity to buy bitcoin cheaper and in more quantity when the dip comes. This is why you should have plans to set up a reserve funds after setting up your emergency funds to enable you take advantage of the dip when it comes.
Huh Merit.s? You are making it sound as if buying the dip is superior to DCA.
Or alternatively you are suggesting that combining DCA and buying the dip is superior to DCA by itself.
There is no way to know in advance, since there are trade offs.
After the fact, you might be able to proclaim that you got lucky with whatever gamble that you chose to make, but you cannot know in advance and you cannot even know if your fucking around trying to buy the dip worked out better over 1-2 cycles or more.
Of course, if guys have accumulated a decent amount of bitcoin, they might choose to change their ways of accumulating bitcoin, yet maybe they have gotten to a stage where they believe that they have enough bitcoin, yet they are just waiting for 1 or 2 more cycles to play out, and so maybe while they are waiting they are ONLY buying dips because they come to the conclusion that they have enough bitcoin. Just because they chose a certain strategy that might well end up emphasizing buying the dip rather than ongoingly DCAing on a regular basis does not even mean that they are correct in choosing that strategy, yet they have come to a balance that they believe is good for their own circumstances and it may or may not end up paying off for them.
As a matter of fact, an investor that keeps his DCA ongoing and buy bitcoin at the dip with his reserve funds and also lump sum whenever, he has extra funds that comes in will definitely reach his bitcoin target in a fast pace than an investor using only DCA method.
I doubt that you know that one strategy is going to work better than another strategy, even though you are wanting to proclaim that you know.
It's just like you are climbing a ladder with only one leg and your friend is climbing with two legs who will reach the top of the ladder first. Your friend, of course.
Just because there are 3 strategies does not mean that you have to use them all.
I frequently suggest that any time that guys are investing into bitcoin and they get some kind of lump sum that comes available, they should at least consider all three strategies in regards to how they are going to use those funds to buy bitcoin, yet the mere fact that they consider all three stragegies does not mean that they have to use all three strategies. The choice that they make has trade offs, and is completely within their judgement to choose which of the three strategies to use, and if they choose to use all of them or not.
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I do not support investing by following other methods along with DCA. Because personally, I think it creates a trading mindset in people subconsciously. Maybe a person is doing DCA regularly, and at the same time he wants to do short-term trading.
But he cannot have a long-term mindset and a short-term trading mindset at the same time. He has to decide one or the other. Because if he wants to do both at the same time, then he may face losses in short-term trading and along with this, his regular accumulation may also be negatively affected. If you think about it from a logical and practical point of view, DCA is usually more profitable in the long run and reduces the risk. Therefore, there is no need to put your holdings at risk by following any other method along with DCA.
Of course, I am not much of a fan of trading, shitcoining and/or buying bitcoin derivative products, yet if guys are tempted to fuck around with those various products, there may well be ways that they can limit their exposure to 10% or less of their bitcoin holdings, and yeah I recognize that gamblers have problems in terms of limiting themselves, yet each of us has the right to choose for ourselves, and perhaps some guys might be able to figure out ways to limit themselves in their trading (gambling), shitcoining, bitcoin derivative products, yet they have the right to make those kinds of choices and to figure if there might be some way to control themselves, even if they might arrive at limitation numbers different from my own, and I personally don't even come close to trading, shitcoining and/or buying derivative products, yet if I were to engage in any of those kinds of behaviors, I would try to make sure that I would be following my own suggestion to make sure that I am limiting myself.
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One thing I want us to understand is; everyone that has finalized going into Bitcoin investment has a target and has everything planned out already,
That is not true. Some guys are more organized than others, yet there is no reason to presume that newbies have to have everything figured out before they can get started buying bitcoin.
but the mistake is the fact that some persons only prepare financially but not mentally or psychologically, in the sense that immediately they experience dip they start having panic attack, they never thought of how to position themselves or not to be moved when dip eventually takes place, it's inevitable, something that can never be avoided by any investor regardless of whether it a long term or short term investment. Dip is general and it's one of the features of Bitcoin investment.
First off, there is no such thing as a short term investment in bitcoin, since that would be trading.
Second, there is some truth in that psychology is stronger when guys are more organized, yet guys do not have to have their psychology in great order prior to starting to invest in bitcoin. Guys can adjust their position size according to their comfort level and their knowledge and even their level of organization. It is good to get started, and guys should be able to figure out that it is better to start out slower if they have some levels of discomfort in regards to their getting involved in buying bitcoin and even if they might have some disarray in their cashflow management practices that they might feel that they need to strengthen.
One thing I want us to understand is; everyone that has finalized going into Bitcoin investment has a target and has everything planned out already, but the mistake is the fact that some persons only prepare financially but not mentally or psychologically, in the sense that immediately they experience dip they start having panic attack, they never thought of how to position themselves or not to be moved when dip eventually takes place, it's inevitable, something that can never be avoided by any investor regardless of whether it a long term or short term investment. Dip is general and it's one of the features of Bitcoin investment.
Mental or psychological preparation is not something that takes time, with basic knowledge about Bitcoin and discretionary money, investment planning is mental preparation. If someone panics and sells their investment during a price drop under the pretext of mental preparation, then think that he did not buy Bitcoin for investment purposes but rather he is trading or he entered the investment without acquiring basic knowledge. Long-termism in Bitcoin investment is mandatory, this is part of basic knowledge, to enter Bitcoin investment you have to acquire that basic knowledge. Basic knowledge and discretionary money are necessary for investment. Asking for time for mental or psychological preparation is just an excuse to procrastinate.
You have mixed messages Creeper0.
To get started buying bitcoin all a guy needs is discretionary funds and common sense. Of course, he might need to learn some things, yet if he has common sense, he can decide for himself if he wants to start out with $100, $10 or some other amount. At the same time, he can work out the details of his learning about bitcoin and/or about how to strengthen his cashflow management as he goes. As long as he has figured out that he has sufficient discretionary funds, then he can get started. There are not other pieces of knowledge that he needs to know in order to start, even though surely if he has common sense, he likely is going to try to figure out if there are areas in which he might not be sufficiently comfortable to get started, and it is up to him to either figure out those discomfort matters and/or to adjust his staring out position size in order to make sure that he is not starting out his bitcoin buys beyond his comfort level.
As far as long term, brand new bitcoiners might not have had yet figured out the differences between investing and trading, so brand new bitcoiners, might not start out with an investment mindset, and they may well have to learn that bitcoin is a long term investment rather than a trade, yet even if they don't know that bitcoin is an investment rather than a trade, they can still get started buying bitcoin as long as they figure out that they have sufficient discretionary funds available to get started buying bitcoin.
The truth is that if you don't understand Bitcoin and the dip occurs, no matter how you try to control your emotions, it will be so difficult that you won't be able to.
If you really understand Bitcoin, you don't need to panic about the dip or even get emotional because you already understand what the dip is all about. But it is only those who see the dip as a threat, as a movement for Bitcoin loss, who will panic about it. The only way to control emotions is to understand Bitcoin, and there is nothing more than this. Emotions remain a constant feeling when you are ignorant about Bitcoin.
There are people that still do panic whenever there is a dip despite there understanding about bitcoin investment. There is need for an investor to have control over there emotions because if they can't be able to control there emotions they may take decisions based on the market trends. Having understanding about bitcoin doesn't mean an investor can get emotional during a dip . Most of the investors that do panic during bitcoin dip do understand what bitcoin is. Infact they know that bitcoin is volatile in nature and bearish season is part of bitcoin cycles but this knowledge won't stop them from being emotional and then taking impulsive decisions.
It seems to me that emotions relate more to cashflow management rather than knowing what bitcoin is.
Sure, it does help to know what bitcoin is, yet if guys put good cashflow management systems/practice into place, and maybe if they are buying bitcoin every week no matter what (while they are in their early bitcoin accumulation phase) then they are likely going to be putting themselves in a better mindset in regards to bitcoin.
Of course, we have to be careful to make sure that we are not investing with money that we cannot afford to lose, because if we are investing with money that we feel that we cannot afford to lose, then we are going to more likely become emotional about the money that we had already put in, especially when the BTC price might be going through extended periods of either moving against us or failing to go up when we would like it to go up. We have to be able to survive through sometimes difficult periods, so having good cashflow management in place is likely to be helpful, even though good cashflow management may well not completely take away all emotions, since no one really likes to see his investment (whether in bitcoin or anything else) to be moving in a direction that he does not like.
One thing I want us to understand is; everyone that has finalized going into Bitcoin investment has a target and has everything planned out already, but the mistake is the fact that some persons only prepare financially but not mentally or psychologically, in the sense that immediately they experience dip they start having panic attack, they never thought of how to position themselves or not to be moved when dip eventually takes place, it's inevitable, something that can never be avoided by any investor regardless of whether it a long term or short term investment. Dip is general and it's one of the features of Bitcoin investment.
It's true that most people that go into bitcoin already have a target, but I don't think that's enough. In bitcoin we always have the dip and rise period, so u think investor should understand this and not pay much attention to it. I think you should have a long time target, so when there is a rise or dip, you will not be bothered about it.
One think I know is that bitcoin pays in a long term, so my advice is for you to just keep accumulating and not care about the price.
Even though you are correct that many times we need to not be too focused on price, especially when we are still accumulating bitcoin. We likely should be just ongoingly buying it and making sure that our budget to buy bitcoin is reasonable and that we have otherwise good cashflow management practices.
At the same time, even if we do everything perfectly, there are no guaranteed that bitcoin will "pay in the long term."
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...consistency buying of Bitcoin through your discretionary income helps grow your portfolio and you don't need to overdo anything if the available means are there but that doesn't mean someone who has their reserve funds set up and their other financial backing set up can't involve in the act of buying through lum sum practice when the price of Bitcoin presents itself on a Dip.
I largely agreed with all of your points @Taricoins - yet your use of the concept of lump sum and buying on the dip is wrong.
Buying on the dip does not become lump sum buying just because you are using a large amount. If you are timing the market or holding back some funds to buy dips, then that is buying the dip, it is not lump sum.
Lump sum is different since lump sum does not relate to price. Buying on the dip does relate to price.
I think we will have to call it an extra advantage that the investor who buys regularly through his DCA method and still have his reserve funds set up to buy the DIP has over someone is who is solely buying through DCA method has, because the two of them are chasing one goal but one is doing it with extra measures that is proven to be effective at that and also at the same maintaining the focus that both needs to get to desired goal.
Buying dips is not necessarily better than straight forward DCA, especially since you cannot systematize buying on dips and you also are not guaranteed that the BTC price will dip to the price that you are proclaiming that you ended up "doing better" when you chose to wait rather than to just buy regularly rather than holding money back.
You can do what you like when it comes to choosing to buy dips and/or to structure your buys around dips, yet it seems misleading when you are proclaiming buying on dips to be a "superior" bitcoin accumulation approach, when it is not necessarily true, even though you prefer that approach.
