The Art of Dollar-Cost-Averaging
DCA is a great strategy, but only when you know exactly what you are doing.
Suppose you are a newbie in trading cryptocurrencies without any prior experience in technical or fundamental analysis. In that case, the first advice that you get once you want to enter to market is Dollar Cost Averaging (DCA).
The idea is super simple.
Let’s say you have 1000 dollars that you want to put aside for crypto investments. Then, instead of investing this 1000 dollars immediately on a coin (or a bunch of them), you divide it into smaller pieces and buy at different times.
For example, you can spend 100 dollars on ten days or 50 dollars on twenty days.
That way, you indirectly minimize the risk of entering the market at high prices. But, at the same time, you hopefully will be affected less by volatility in the prices.
DCA is an excellent strategy for scheduling your buy orders. However, the main problem is that most of the time, people are implementing this strategy incorrectly.
