0:49
beginner
June 13, 2022
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what is dollar cost averaging?

Dollar-cost averaging (DCA) is a financial approach that aims to decrease the impact of market volatility on crypto purchases. Since market timing is one of the most difficult things to do when it comes to trading or investing, the main advantage of DCA is that it decreases the risk of investing at the wrong time. To achieve that, It involves dividing up the investment into smaller pieces and purchasing at regular periods instead of putting the same amount into one big piece and investing it once.

For example, I want to buy $1,000 of Bitcoin (BTC) but the market is volatile. I buy $500 when BTC's price is $35,000. The price then drops to $30,000 the following day, so I buy the remaining $500 of BTC at a lower price so I get more-or-less the same amount of BTC from the $1,000 - removing some risk and ensuring I get as much BTC with my $1,000.

Therefore, the idea is that by investing in this market, the investment will be less volatile than if it was a flat amount.  However, it does not completely eliminate every risk, other factors should also be considered while investing.

*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.

*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.

what is dollar cost averaging?

Dollar-cost averaging (DCA) is a financial approach that aims to decrease the impact of market volatility on crypto purchases. Since market timing is one of the most difficult things to do when it comes to trading or investing, the main advantage of DCA is that it decreases the risk of investing at the wrong time. To achieve that, It involves dividing up the investment into smaller pieces and purchasing at regular periods instead of putting the same amount into one big piece and investing it once.

For example, I want to buy $1,000 of Bitcoin (BTC) but the market is volatile. I buy $500 when BTC's price is $35,000. The price then drops to $30,000 the following day, so I buy the remaining $500 of BTC at a lower price so I get more-or-less the same amount of BTC from the $1,000 - removing some risk and ensuring I get as much BTC with my $1,000.

Therefore, the idea is that by investing in this market, the investment will be less volatile than if it was a flat amount.  However, it does not completely eliminate every risk, other factors should also be considered while investing.

*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.

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