Dollar Cost Average. Trading or a planned repetitive purchase?

[PrivacyG]

I was replying to another Topic in this Board a few moments ago when this dillema came to my mind.

Dollar Cost Averaging includes a few characteristics of typical trading.  For example, you are doing this particularly to lower your entry point and cash out Profits earlier than you would have if you never adopted the strategy in the first place.  But on the other hand it feels like I am cheating by saying it is trading because it involves no other thing but clicking the Buy button every set number of days, weeks et cetera.  The Internet does not help with my dillema, some articles calling it an investing strategy while others call it a trading strategy.

What do you think?  Is Dollar Cost Averaging a TRADING strategy or an investment one?

[SquirrelJulietGarden]

I was replying to another Topic in this Board a few moments ago when this dillema came to my mind.

Dollar Cost Averaging includes a few characteristics of typical trading.  For example, you are doing this particularly to lower your entry point and cash out Profits earlier than you would have if you never adopted the strategy in the first place.  But on the other hand it feels like I am cheating by saying it is trading because it involves no other thing but clicking the Buy button every set number of days, weeks et cetera.  The Internet does not help with my dillema, some articles calling it an investing strategy while others call it a trading strategy.

What do you think?  Is Dollar Cost Averaging a TRADING strategy or an investment one?

It can be used for both investment and trading, I don't see any big problem if traders apply DCA strategy for their trading portfolio if they trade with Spot, with own money, and don't use leverages. It can help them to do both bitcoin accumulation, average their trading price, and reduce risk of getting loss in trading. If they have temporary loss with trading, they can continue accumulation and turn to holding for a while some months like investors.

Withdraw their bitcoins and investment capital with time is a good strategy too, but you can consider it as investment or trading practice.
JJG Sustainable Bitcoin Withdrawal Strategy
https://bitcoindata.science/withdrawal-strategy

[sleepfirefly]

What do you think?  Is Dollar Cost Averaging a TRADING strategy or an investment one?

my understanding of trading is it includes BUYING and SELLING
so to me DCA is not a trading strategy because most people who do this
have an intention to keep holding their bitcoins and do not intend to sell
their bitcoins anytime soon

so no not a trading strategy

[shinratensei_]

It's investing in my book. If you price got lower than your entry point you just wait it out. It's not a trading if you are waiting until it reached your target and the wait might take a cycle or two.
DCA is basically just pressing buy button whenever you got the money and forget about it hoping that in the future it will grow multiple folds and that's it. No technical analysis, no waiting for dip, etc. Just holding the same way you're holding gold.

[Webetcoins]

I don't get that how a repetitive purchase can be a trading when your previous positions were not yet booked profit/loss?

Trading needs the completion of full cycle of entering and exiting whereas investment doesn't.

There are lots of types of DCA. But, it is all about regular buying regardless of the price and trend.
You may DCA for your trading as well and you may convert your trading positions into investment as well. If you exit, that's a trade and if you keep your positions open for years (for the case of bitcoin), it's investment.

[noorman0]

The striking difference between the two: Trading is chart-awere, investing is fundamentals-awere.

Trading is generally sequential entry and exit, requiring a more complex strategy than simply planning a buying schedule in DCA because traders must be able to create confidence in each entry and tend to avoid price zones they deem unprofitable.

When measuring DCA behavior, purchases are not based on much else except fundamental value, as is the case with investing.

[_act_]

What do you think?  Is Dollar Cost Averaging a TRADING strategy or an investment one?

Anyone that say DCA is a trading strategy is only saying something that is completely not true because it is not a trading strategy but an investment strategy. What traders can use is to average at some price points and not be buying more bitcoin weekly or monthly which should be used for long term purpose which is investment.

[Wiwo]

I was replying to another Topic in this Board a few moments ago when this dillema came to my mind.

Dollar Cost Averaging includes a few characteristics of typical trading.  For example, you are doing this particularly to lower your entry point and cash out Profits earlier than you would have if you never adopted the strategy in the first place.  But on the other hand it feels like I am cheating by saying it is trading because it involves no other thing but clicking the Buy button every set number of days, weeks et cetera.  The Internet does not help with my dillema, some articles calling it an investing strategy while others call it a trading strategy.

What do you think?  Is Dollar Cost Averaging a TRADING strategy or an investment one?

Trading per say is also investment as long as you take some factors into consideration such as timing and market.

Trading means you risk your money to buy assets that you think will be of higher profits or value in the future.

Investment is same too, buying with hope to make profits,  but the difference between the two of them is what we now call the Timing,  because time is what make the difference between a DCA trader and an investor.

[Wind_FURY]

I was replying to another Topic in this Board a few moments ago when this dillema came to my mind.

Dollar Cost Averaging includes a few characteristics of typical trading.  For example, you are doing this particularly to lower your entry point and cash out Profits earlier than you would have if you never adopted the strategy in the first place.  But on the other hand it feels like I am cheating by saying it is trading because it involves no other thing but clicking the Buy button every set number of days, weeks et cetera.  The Internet does not help with my dillema, some articles calling it an investing strategy while others call it a trading strategy.

What do you think?  Is Dollar Cost Averaging a TRADING strategy or an investment one?

It's a VERY LONG-TERM form of "trading". BUT in the Bitcoin community it has become a sort of exit strategy to hedge against the legacy/fiat financial system by purchasing using DCA then HODL.

Another reason people do this is because it's actually hard to predict the market's price movements, then it becomes a more feasible strategy for plebs like us.

[Ruttoshi]

What do you think?  Is Dollar Cost Averaging a TRADING strategy or an investment one?

Dollar Cost Average is a long-term bitcoin accumulation strategy that enables the poor and average to build their bitcoin portfolio overtime in order for them to reach their bitcoin target. The reach also uses DCA to pile up more bitcoin for themselves. That's what El Salvador has been using to accumulate 1 bitcoin per day.

It's not related to trading because trading is about buying and selling within a short time. A holder uses DCA. DCA purchase doesn't come with emotions attached to it but if you say that you are using DCA as a trader, you will still have traders fever because you are after selling.

[palle11]

The Internet does not help with my dillema, some articles calling it an investing strategy while others call it a trading strategy.

What do you think?  Is Dollar Cost Averaging a TRADING strategy or an investment one?

Interesting topic I will say and I don't think I should bother my head on it because we already know what it is. You are buying and accumulating coins to sell in the future. Does this not look like it best suit to be called spot trading? Though at a point we can still consider it as future trading when you are set to sell.

But on a general level, it can still be regarded as both spot and future trading.

I will however agree that it is an investment strategy used to accumulate crypto or stock asset to hodl for the future. So it is a term that has been made popular by bitcoin community here for buying and hodling bitcoin or crypto for a certain time.

[crwth]

Should there even be a difference? Since it's just a "Strategy". No need to determine it and just decide for yourself what it is. Imagine this, it is SO USEFUL, that it applies to different areas of anything, whether it's trading or investment. BUT in trading, it is investing as well, so it's technically just the same.

[pusaka]

I personally refer to it as investing rather than trading. Even from the moment I first encountered the term or strategy of DCA, I've considered it an investment.

However, I've actually seen some people mistake trading and investing for the same thing, so they also call trading an investment. So, it all comes down to what people believe they'll call it.

I don't mind the term, because it's incredibly beneficial. I've experienced firsthand how much DCA makes investing easier.

[aoluain]

My understanding of DCA or at least what I have been practicing is a strategy to lower my average
purchase price of Bitcoin.

* lowering the average price is difficult almost impossible as the Bitcoin price over time is moving
up - anyway, everyone will know what I mean.

I can do this in a few ways:
1. pay absolutely no heed to the market and just buy when I have FIAT ready
2. follow the market in some way and when a notable drop arises then make a buy
3. diligently follow the market and try and synchronise my buy at an optimal time to absolutely
    maximise the Bitcoin amount for my FIAT

Its my understanding that "Trading" can happen in exactly those 3 ways also so I dont see a difference,
the motivation or strategy ^{as per crwth}

The trade can be FIAT or Altcoins into Bitcoin.

The trade can also involve selling at a market high to take profits and waiting for the market to drop to
make your buy, cant that be part of a DCA strategy too because thats definitely "trading"?

[SquirrelJulietGarden]

It's a VERY LONG-TERM form of "trading". BUT in the Bitcoin community it has become a sort of exit strategy to hedge against the legacy/fiat financial system by purchasing using DCA then HODL.

Another reason people do this is because it's actually hard to predict the market's price movements, then it becomes a more feasible strategy for plebs like us.

It can be used for both trading and investment but surely this DCA strategy is more favorite used for investment, long-term investment than for trading. People who use DCA for trading are not professional traders and can not enter and close their positions with good calculation and discipline. They open a bad trading position, don't know where to exit and have to DCA for lowering their entry price in order to improve their trading position profit or reduce loss.

With professional traders, they can simply trade, open a trading position, and close it for profit or close it with a cut loss without need of DCA. As they will wait for other opportunities, other entries to open next trading positions.

[mu_enrico]

DCA is both a trading (in general) and investing strategy; however, it depends on how strict your definition of trading is. If what you mean by a trader is someone who does day trading or at least executes orders several times a month, then DCA is more of an investment strategy.

For me, DCA is not a trading strategy due to my personal belief about what a trader is, and it is more suitable for investment. DCA combined with automation means you do not have to think about price, charts, news, etc. You simply focus on your work, and in the long term, I think some research suggests that DCA is superior to people who try to time the market.

[sokani]

What do you think?  Is Dollar Cost Averaging a TRADING strategy or an investment one?

To get the right answer. We need to define "trading", which simply means "buying" and "selling."

We know DCA is buying of an asset bit by bit, but does it involves selling? And the answer is YES. It's commonly used for the buying of assets, but it also involves the selling of assets. So technically DCA can be regarded as a trading strategy.

[batang_bitcoin]

What do you think?  Is Dollar Cost Averaging a TRADING strategy or an investment one?

I think it's not important of what it actually is based on how you perceive and understand it and how others do. But IMO, it can be a both thing.
We DCA and that's the kind of strategy that we do as an investor and since it involves buying as well, that's how trading comes in. So, it's an either thing and that dilemma of yours can get the confirmation that if it's either or the other and only one you think of it, that's valid. And what matters is on how you are consistently doing it. I guess that's the most important thing when you DCA.

[mindrust]

Listen to the pros. Good investment is boring they say. And they are right. If you are happy when you are opening a position then it is almost certain that you will close that position for a loss. That is human psychology. You followed the heard, you bought or sold when everyone doing the same thing and when the tide turned against the majority, you’ll follow them again. It is because you couldn’t resist when you opened your position and it was a wrong move back then, and then you won’t resist the majority when you are closing your position again and make the same mistake one more time. DCA fixes all those. It doesn’t care what happens in the markets. It doesn’t care if it is up, down or sideways. It just makes you rich in 5 years or something. It works, because it is boring.

[BitMaxz]

my understanding of trading is it includes BUYING and SELLING
so to me DCA is not a trading strategy because most people who do this
have an intention to keep holding their bitcoins and do not intend to sell
their bitcoins anytime soon

so no not a trading strategy

You already said that trading includes buying and selling, so why does it end up that DCA isn't a trading strategy?
You are still going to sell it in the future, meaning you trade, and you won't make any profit if you don't trade it in fiat.
Meaning DCA is a trading strategy but also an investment strategy.
Other's would call it an investment, but it works the same way if you apply it in crypto.