DCA vs Smart DCA, what do you choose?

[tranthidung]

I believe many of us are familiar with Dollar Cost Averaging, DCA but how about Smart DCA.

This thread is for discussion, and I am not concluding Smart DCA is actually Smart and better than DCA. 

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I wanted to remind you about the concept of Smart DCA, purchasing BTC during corrections, when the price drops below the 1W-1M Realized Price.

This strategy works well during a bull rally and is much more effective than classic DCA.

A quick glance gives me that is a good strategy but if I look deeper, it is not actually smart.

By using Smart DCA, simply glance at it, we see entries are below 1W-1M Realized Price but we will miss days, weeks before price drops behind the Realize price (blue line) and miss chances to buy when price is even lower than the Green areas that are entries given by Smart DCA indicator.

Share your thinking about this strategy please.

Personally I see a traditional DCA strategy is better.

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[Plaguedeath]

In other words, buy the dip.

It's not only work during bull season, but during bear season too because you will able to accumulate more coins. The problem of using this strategy is you need to check the price everyday to get updated and you need to set a budget how much you will buy for the dip, the dip could happen continuously in one month and it could be not happen in one month because the market is bullish.

[bluebit25]

Yep, agree this is indeed a smart strategy. If I have the ability to apply it, I will do the same, but I also understand that the principle should not be too stubborn, so I often think about harmony between investment and life. Someone's formula may be suitable for that individual, but it may not always be applied effectively.

Looking back at the method, I'm still a bit skeptical about using it on a large time frame so it's just a simulation for DCA on a small time frame, but in this space if such good timing is certain everything is so convenient.

[Frankolala]

The smart DCA method is good for investors who have accumulated up to a certain level of bitcoin either close to their bitcoin target, because when you have reached that stage, you will not want to buy frequently, but you will look for time when to buy. Maybe at the dip or using the smart DCA during corrections in the bull run.

However, for a new investor who just started his bitcoin accumulation journey should not use the smart DCA in this stage, because their size of bitcoin is very small or they don't have any. The weekly or monthly regular DCA is the best, because it will give them the opportunity to buy bitcoin often and keep on grow their bitcoin portfolio bit by bit, without skipping any week or month.

[Barikui1]

I believe many of us are familiar with Dollar Cost Averaging, DCA but how about Smart DCA.

This thread is for discussion, and I am not concluding Smart DCA is actually Smart and better than DCA. 

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I wanted to remind you about the concept of Smart DCA, purchasing BTC during corrections, when the price drops below the 1W-1M Realized Price.

This strategy works well during a bull rally and is much more effective than classic DCA.

A quick glance gives me that is a good strategy but if I look deeper, it is not actually smart.

By using Smart DCA, simply glance at it, we see entries are below 1W-1M Realized Price but we will miss days, weeks before price drops behind the Realize price (blue line) and miss chances to buy when price is even lower than the Green areas that are entries given by Smart DCA indicator.

Share your thinking about this strategy please.

Personally I see a traditional DCA strategy is better.

What I actually think is that the DCA method is the best when it comes to accumulating Bitcoin, what you as a person need to do is to act smarter, in the sense that if you are buying a certain amount of Bitcoin weekly or monthly, and you observe that the price of Bitcoin have dropped to an advantageous price, you just have to be smarter by buying aggressively during that period, as long as it does not affect you in financing your basic needs during that period, if you are smart enough during that period, you will definitely thank yourself later, because you will have a lot Bitcoin in your possession during a shot period of time, so to me their is nothing as smart DCA, you, you just have to act smarter as a person.

[mk4]

This "smart DCA" thing is pretty much just once again trying to time the markets — whereas the point of DCA is to actually accept the fact that 99% of people can't time the markets, hence slowly buy daily/weekly/biweekly/monthly.

So yea, good 'ol boring DCA.

[hugeblack]

The DCA strategy assumes that the user does not have any prior knowledge about Bitcoin or trading, and therefore it is a long-term strategy based on the fact that the price of Bitcoin in the long-term trend is bullish, but once you gain some experience, you will realize that it is not the best strategy in terms of profits, but it is the easiest, so there is any improvement on it. A strategy like Smart DCA will be your next step and with more knowledge you will reach the stage of profit from day trading.

BTW, I need to sign in so I can see charts.

[AirtelBuzz]

Personally I prefer to invest in DCA method.
To be honest I choose the DCA method over Smart DCA at the moment. Because I don't have enough money to buy a lot of bitcoins at once that's why I'm not using the smart DCA method.

But with the DCA method I am following I can buy bitcoins weekly or monthly whenever I want according to my own ability. DCA method is very helpful for beginners even if they have little knowledge about investing. DCA method is best for buying bitcoins in very small scale, once we start investing with this method our investment will be very rich.

[Poker Player]

Although I do kind of smart DCA at some point, I think for most people it is better to do simple DCA and not eat the head. The smart DCA, as mk4 says is again trying to time the market, which we already know is very difficult. Besides, I remember having seen some studies on the stock market showing that in reality between doing simple DCA or waiting for the downturns to buy there was hardly any difference in terms of profitability in the long term (if the one who buys in the downturns is right, which is a lot to assume).

I, as I say, sometimes I have taken advantage to reload in a market downturn because at that time I had more money available or I have sold at highs to enjoy profits but these are different reasons than trying to make a "smart" DCA.

[Charles-Tim]

To be honest I choose the DCA method over Smart DCA at the moment. Because I don't have enough money to buy a lot of bitcoins at once that's why I'm not using the smart DCA method.

Both DCA and smart DCA do not require huge capital to start because you are not investing at ones in both. Just that in normal DCA, you will buy bitcoin at certain time interval like a week, biweekly or monthly. But in smart DCA, you will buy bitcoin after price fall weekly, biweekly or monthly. Like saying buying the dip.

[avikz]

Unless you understand the time when you need to get into the market, the smart DCA is not going to work for you. It's nothing but an indicator to get into the market based on price. That's why the majority of the people will get it wrong.

The traditional DCA uses a specific day in a month or weak to get into the market. I think that works better in longer run. Because honestly no one is going to know when the price will be at the lowest level.

[tranthidung]

The DCA strategy assumes that the user does not have any prior knowledge about Bitcoin or trading, and therefore it is a long-term strategy based on the fact that the price of Bitcoin in the long-term trend is bullish, but once you gain some experience, you will realize that it is not the best strategy in terms of profits, but it is the easiest, so there is any improvement on it.

DCA saves our time and avoid headache to time the market.

A strategy like Smart DCA will be your next step and with more knowledge you will reach the stage of profit from day trading.

It can be a next 'smart' step but if we look deeper, we can see that it is not perfect and you even can buy at higher price with Smart DCA than with classic DCA.

BTW, I need to sign in so I can see charts.

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This "smart DCA" thing is pretty much just once again trying to time the markets — whereas the point of DCA is to actually accept the fact that 99% of people can't time the markets, hence slowly buy daily/weekly/biweekly/monthly.

I can not disagree because the Smart DCA is somewhat against main purpose of DCA.

Although I do kind of smart DCA at some point, I think for most people it is better to do simple DCA and not eat the head.

When people try to do Smart DCA, they are trying to be smart and time the market. It is oppositely against DCA strategy.

Unless you understand the time when you need to get into the market, the smart DCA is not going to work for you. It's nothing but an indicator to get into the market based on price. That's why the majority of the people will get it wrong.

With Smart DCA, it has one more disadvantage, people will have to wait a long time to get in and it is big test for their patience. They can keep waiting for some days, weeks but if they lose patience at the top, buy at top, it's painful.

[DeathAngel]

It doesn’t really matter if you are willing to hold for a couple of cycles, you will outperform most, if not all, legacy investments. The main thing is you’re buying regularly, it doesn’t make a whole world of difference if you smash buy a few times or DCA over a long period. Just have some skin in the game.

[Doan9269]

I believe many of us are familiar with Dollar Cost Averaging, DCA but how about Smart DCA.

This thread is for discussion, and I am not concluding Smart DCA is actually Smart and better than DCA. 

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• It is built by @AxelAdlerJr on CryptoQuant and let's read his post about it on X.

I wanted to remind you about the concept of Smart DCA, purchasing BTC during corrections, when the price drops below the 1W-1M Realized Price.

This strategy works well during a bull rally and is much more effective than classic DCA.

A quick glance gives me that is a good strategy but if I look deeper, it is not actually smart.

By using Smart DCA, simply glance at it, we see entries are below 1W-1M Realized Price but we will miss days, weeks before price drops behind the Realize price (blue line) and miss chances to buy when price is even lower than the Green areas that are entries given by Smart DCA indicator.

Share your thinking about this strategy please.

Personally I see a traditional DCA strategy is better.

We need to first understand such particular need for undergoing DCA at first, then after the realization of such, we will have to determine whether to use the classic or smart DCA as according to how we see and picture the market as well with the way we can afford making an investment for our own benefits, after all, we have achieved one thing which is the purchasing power using a particular pattern of DCA, this will help reduce the losses when the market dips the more and our recovery pattern will be very easy to achieve as long as the market pumps sooner again, i can see such being an effective means one can adopt this period also with the situation on how the market is going.

[pawel7777]

The classic DCA is an effective strategy for people who are not active traders and don't want to be playing in constant monitoring and timing the market. They don't even have to make any transactions manually themselves anymore, as many exchanges nowadays would offer regular purchase option.
I have my doubts whether the "Smart DCA" is a good term as the approach here would be quite different from the classic DCA and could result in completely different outcome - i.e. in scenario where there are no dips and the price is moving slowly and consistently up for prolonged period (which is rare but theoretically possible).

From what I know, timing the market, or "buying the dips" strategy is, on average, more effective than DCA, but the DCA is still much more convenient for most people.

[Eternad]

By using Smart DCA, simply glance at it, we see entries are below 1W-1M Realized Price but we will miss days, weeks before price drops behind the Realize price (blue line) and miss chances to buy when price is even lower than the Green areas that are entries given by Smart DCA indicator.

But I believe you will more average lower price if you use the Smart DCA method because you can guarantee that you purchased on correction price. The traditional DCA can give you much higher average price especially if you keep buying already near the peak of every trend reversal.

Although the difference might be just minimal while the goal is still the same which is to acquire as much as possible so I believe both of them is the best because they have same end goal despite differences on the method of buying.

[Rikafip]

Isn't the reason why people choose DCA sonthey don't have to follow the market on the regular basis, obsess over the price while trying to time the market? So I don't see why someone who goes for that option would switch to "smart DCA" as it goes against the most important reasons why they are investing that way in he first place.

I will look a little bit more into it, but I don't think that is worth the hassle. At least not for those like me who don't want to having to check what's going on the market.

[pawel7777]

But I believe you will more average lower price if you use the Smart DCA method because you can guarantee that you purchased on correction price. The traditional DCA can give you much higher average price especially if you keep buying already near the peak of every trend reversal.

In theory - yes, but there are few factors that could backfire with Smart DCA strategy, i.e. there's no guarantee there will always be a correction or correction could come late, after the price skyrocketed, and you'd be buying at the higher price than those doing classic DCA. Also, unless you managed to automate your purchase (which I don't think is possible on any platform without having a trading bot), there's a risk you could simply miss the correction and not buy in the right time, i.e. due to holidays, other commitments etc.
But yeah, both strategies have their own risks and only the time will tell which one is more effective.

[Bananington]

You are basically saying that smart DCA is a strategy used when one intends to DCA but instead of doing the DCA journey randomly or on specific days, we use the smart DCA indicator to know the exact day to buy before the price gets higher.
Am sure it is just the fact that one has to firstly consult an indicator of sort before making further DCA commitment so as to buy purposefully at the cheapest price and inturn have more value in return that makes this a smart DCA, else, it's just a DCA strategy with indicator tools.

[batang_bitcoin]

It doesn't matter what kind of DCA is better for us to use. As long as we've got the money ready to get into the market for buying the dip or anytime that we wish to do, that's the best strategy for us. And no matter what kind of classification it has got for DCAing, the best thing to do in the market is to buy the dip whenever there's an entry point that we should buy it. Anyway, how about anyone who uses either of the two is actually a wise and smart investor?