DCA – A strategy that works every time

Do you think of investing in cryptocurrencies but does not have time, knowledge or the desire to get into trading? THE DCA (Dollar Cost Averaginging) Perhaps is the strategy that suits you! This investment strategy consists in investing the same amount of money at regular intervals. This means, among other things, that you don’t need to worry about the curves and study the market continuously. These periodic purchases allow “Smooth” your investment. There is no ideal strategy, however it is viable if you want to get started. Especially if you do not have any particular knowledge of trading and if you are targeting the long term. Sit comfortably, Feel Mining explains everything to you.

The advantages of dollar cost averaging

In terms of investment, cryptocurrencies are increasingly envisaged. Trading, which consists in buying an asset when the market is low and reselling it when the market goes up, allows, over time and the necessary knowledge, of make your capital grow. It’s enticing right? Alas, it happens that the efforts of learning and understanding this system are in vain. Indeed, it happens that investors end up buying or selling at the wrong time.

Buying an asset at a certain price, reselling it only when it is higher and repeating the Ad Vitam Aeternam operation seems easy. However, Psychology can mislead the investor. Because our brain is thus done, it happens that when an asset drops people afraid and sell it. It would obviously be necessary to do the opposite so as not to miss potential gains if the market goes up. In the same way, when an asset rises, temptation can push for precipitation. This is called “Fomo” (Fear of missing out) in jargon. In this case, the investor, beginner or not, could buy when the course is about to fall and where it should therefore be sold.

Define a Dollar Cost Averaging strategy (DCA) eliminates this type of emotions and, thus, to avoid errors of judgment. This strategy requires you to continueInvest the same amount regularly Without worrying about market fluctuations. Therefore, no need to monitor curves and above all, more errors of judgment linked to psychology. With the DCA, no more temptation! You will not sell an asset when you are afraid and you will not buy it when its course explodes. You simply define an amount to invest over a given period. Then you just have to stick to your strategy.

With this strategy, you buy more crypto when its price is low. Obviously, you will have less when its price is high. Therefore, you “smooth” your investment leading to an average price of your assets over time and purchases. It is also a viable solution in order to Limit your losses in the event of a market drop.

DCA also has drawbacks

We have seen the advantages of the DCA. It is a practical tool to reduce risks. In addition, you no longer care about market fluctuations and Reduce the average price of your investments. However, investors who bet on this strategy must also expect some drawbacks.

With the dollar cost averaging, you can miss potentially higher yields. Indeed, this strategy implies that you keep your money longer in the form of liquidity. This limits the risk of losses but can cause lower yields An investment made at the right time. Especially if you are targeting the short term. Indeed, if the market rises for a period when you practice DCA, you risk missing earnings that you could have made by investing at the right time.

Also, by undertaking to buy cryptocurrencies regularly you expose yourself each time at the expense that these purchases imply. These costs also reduce yields. However, they can be minimal depending on your investment and your more or less long -term vision.

Keeping your money in the form of liquidity until your next purchase also represents a small drawback. Indeed, you will have to manage to make yourself violence so as not to spend it in other purchases or activities. Thus, you can always invest it in your cryptos when you have defined by implementing your strategy. You have understood, the dollar cost averaging is A question of discipline.

If you are looking to reduce your risk of short -term losses, DCA is a strategy that could suit you. It is also viable if the volatility represented by cryptocurrencies concerns you and that you have trouble managing your emotions. Even if it involves giving up certain potential gains, the fact ofAvoid feelings of regret After a loss of capital is priceless. If you like the idea, Opt for the purchase of Crypto in DCA thanks to the monthly feeling of feel-mining.