Dollar Cost Averaging (DCA)
Dollar cost averaging is basically a technique to buy cryptocurrency with lower risk. Dollar cost Averaging consists of investing a fixed amount US dollar into BTC on regular time interval. For example purchasing $20 every week instead of purchasing it for one time only.
Go to Buy crypto option enter amount $20 and instead of one time payment select invest every weak so if price of bitcoin is hiked to we are automatically going to buy a small amount of a bitcoin and if the price of bitcoin is plummet down to $20 we will buy 1 BTC automatically. Dollar cost averaging increase the share purchased when the market is declining and can lead to fewer shares purchased when the price is rising .
Best bitcoin investment strategy
We should make sure our investing strategy is optimal and backed by data too because unfortunate reality is that people enter the crypto world. if they randomly invest and don’t use any strategy they will lose a lot of money and may leave crypto for ever .
Let’s say there are three investor X Y & Z . X who buys Lumpsum, Y who day trades and Z who do Dollar cost averaging. We will look out who will win the best investor and takes home the bragging rights .
X is entering the market investing all his funds with the single trade. Problem is that he is entering so late in the cycle prices are so high which will cost him losing his amount his initial balance was $20k and now its $10k.
Y is the day trader he don’t hold so much and buy and sell bitcoin more often he made profit at first but market turns and he started losing streaks . Few mistakes which people made are that they don’t do analysis of the market and don’t properly manages the risk they just randomly invest in the market.
Z enters the market late but she studied much about the crypto and Dollar cost averaging which helps her in investing the consistent amount in interval she did not invest all her funds at once just like X and Y. DCA have lower risk, Dollar cost averaging increase the share purchased when the market is declining and can lead to fewer shares purchase when the price is rising. So the best strategy that involves lower risk and more profit is DCA which is followed by investor Z. We earn so much from DCA strategy and there are also less chances to lose our money as well.
Another method of Dollar Cost Averaging is to buy in parts means if someone wants to buy Ethereum for $100. He should buy for $40 if suppose Ethereum is at the price of $4000 and then all of a sudden the price of Ethereum goes to $3700 but here instead of being panic, he buys further for $30. Now here if the price start going upwards and Ethereum goes to $3900 the person above would be in profit because his $30 investment has started giving him profit but $40 investment is in a little loss, so this loss is being covered by the profit he earns from $30 investment. Now if the Ethereum continues to go higher than this gentleman will get profit. He could either put his remaining $30 at any price between $4000 to $3700 or wait for Ethereum to move further down to $3400 where he intent to buy. So in this scenario he will be in definite in profit.