Topic: DCA method (Read 3547 times)

I agree with you that some natural things are beyond our own control. Of course, a discretionary income must always be available and a committed long-term mindset is needed for one to be consistent in using DCA method to build and grow his bitcoin portfolio overtime.

It is whereby, during your accumulation journey you lost your job or due to inflation your discretionary income is no longer there for you to use to buy bitcoin continuously that you have to stop buying and hodli while you look for a new means of income and survive with your back up funds so that you don't sell part of your bitcoin.

Someone might not be consistent if he choose to accumulate and grow his bitcoin investment in a whimpish way.

Although in theory what you said is true, but in practice it is not that simple mate because in the end when talking about consistency then indirectly this must start everything from the beginning well so as not to become a problem later on.

Sometimes there are always some conditions that are out of control and out of planning, especially when our financial management is not very good which actually makes the consistency we do hampered.
Although in the end this is only a small possibility but in fact this happens for some people so that no matter how well we understand the theory especially about consistency but when the implementation is not very good then the results will also not be optimal so in this case it needs to be emphasized that in the end the problem that is considered unimportant can actually be a big problem so therefore do not underestimate consistency because the work will be much more difficult than we imagine and from what is in theory.

There is also the fact that if you wait too long, the fiat you are saving will become worthless.

Take a look at the inflation rates of some countries, like Argentina, Turkey, etc.

You literally will be better off buying Bitcoin as soon as possible.

Consistency comes in when their is a better understanding to what you are doing, if you don't understand hodling, DCA and the volatility of bitcoin it is impossible for you to be consistent. You can only be consistent with what you know and understand, then you will know what you really want and you don't have any choice for to be consistent and stick to your investment. People who struggle to be consistent with their investment is either the investment is nothing serious to them and they are in just to make quick money from bitcoin.

You are contradicting yourself because you said that one don't need to look for an entry point when buying, and you are still saying that DCA is worth starting in the bearish market.

DCA should not be considered to be done best at the bear market because your aim is to keep on buying every week or month in a long time and that is why someone who wants to start his DCA should start right away irrespective of the price of bitcoin. DCA is done at all price level because it is a continuous accumulation process which should be kept ongoing with persistency and consistency.

The reason why one DCA is to help us manage our cash flow and at the same time be investing by building and increasing our bitcoin stash gradually without feeling it overtime for the future. That is why a new investor just need to keep on buying for 4-10 years and above.

Maybe the initial amount is not so important, but how much you can invest during the accumulation period is important. There is a difference in how much you can afford $10, $50 or $100 in the end it will play a very significant role. Therefore, in order to start, you don't need to worry about saving a large amount, but if you can get a tangible result, then you should take care of your income growing so that you can painlessly allocate 10% or more interest and this is a good amount for investment.

Another advantage with this strategy is that when you start buying, you don't need to look for an entry point, you just buy once a week, or once a month (depending on your decision and your capabilities). Of course, you should understand that it is worth starting to buy in a bearish market, and not when bitcoin is near its ATX, but this is not the most difficult task in this strategy.

The simplest way to stack your "acorns" is of course to DCA. There are even flexible strategies to it depending on income level and amount. Some people stagger their DCA by dynamic DCAing. An example of this with $100 if you were paid on a weekly basis would be buying $10 a day for 7 days until your get paid again and reserving the last $30 for a small dip where you can get the most value out of your trade. The best part about DCAing is that it's one of the least wasteful ways to accumulate anything as you are usually getting the best price for the asset over a given time. It's a super simple fool proof way to invest. Other ways that can help are earning some kind of yield that doesn't expose you to leverage or risk your stash of BTC. If someone attempts to do this try to make sure you have custody of your btc if you attempt to deploy it to make it "work" for you. If you must put it in the custody of some other entity in order to deploy it. Do your research and understand the risks. Use collateral or an escrow system.

just my 3 satoshis
cheers

Automatic purchases every month are difficult because when making automatic purchases then we definitely have to be able to set prices in purchases so that it will actually make you more hassle so in this case when we really want to get used to it then we must be able to force ourselves to get used to it more because after all, habituation occurs because of the compulsion of ourselves to be able to do it. It does not mean that we force purchases but we do it so that we get used to doing it consistently.

All this is not easy but when we are really serious about the actions we take (in investing with the DCA method as in the title) and we are ready and responsible for all situations that occur then actually just force ourselves to be able to consistently do it because the main problem in DCA is a condition where we cannot force to act consistently which makes your plan not work properly.

Consistency does work pretty well, specially if it is in an auto pilot mode.

Let's say you put your bank an automated buy, that thing will happen every month, even though you forgot about it.

Some of the best investment portfolios have been the ones of people that forgot their accounts 

First of all, meeting the necessary needs is of course very important before we decide to invest because when someone chooses to invest without having enough funds for their needs, I think it will be difficult for them to maintain their investment in the long term, as a beginner it would be very good if they use the DCA strategy in running investments but they also need to think about the funds that will be used to invest and don't let them not be able to fully meet their needs then invest of course this will not last long.

I don't think that's the right direction to start investing.
If you want to explore more details on effective ways to start investing in Bitcoin, you can visit the JJG thread and here is the link https://bitcointalksearch.org/topic/m.58719590

So before starting to invest, make sure we already have a job with a regular income every month because with a regular income, you have a cash flow that you can set aside for various divisions that you want to do, for example for daily living needs, for investment and also dividing it for emergency funds.

I also don't understand what you mean about controlling purchases, you have to take it simply if you want to apply DCA. You don't need to think about analyzing price movements because DCA does not depend on the price when you buy it. Success or not depends on each individual because obstacles are always there throughout the investment we make, of course the obstacles are none other than how you continue to hold Bitcoin.

That's why a new investor should adopt some more strategies, because he has to take the initial risk and buy Bitcoin first. And after that he will spend the basic expenses of his family and buy bitcoins with the money left over. In this way, if the investment can be sustained for a long time, then it will definitely be successful, but remember that if a new investor follows the DCA method, he will not be deprived in any way but will be successful. 
But it can only be successful by holding for a long time, in which an investor can accumulate the most bitcoins while keeping his investment properly. Because it will reduce the purchase price, if there are signs of an uptrend in the current market, there will also be Bitcoin buying controls.

To be honest, being consistent in doing DCA is a tough one to maintain. Not all are able to keep on going with DCA because of many circumstances and that's why whoever does this in the past and are still doing right now, that's a sign that person is doing better now.

Just think of it as an actual savings that goes directly to investing if you are buying Bitcoin. The attitude you put into it and by being consistent will make you profitable in the long run.

In fact, I think the biggest problem with DCA investing is that consistency doesn't work very well and many people fail because of consistency issues.
Sometimes in doing this scheme we always try to take excessive actions such as when doing it without thinking by giving a large enough budget from the beginning which ultimately disrupts you in investing.
In addition, the initial planning that is less mature may make you unable to be consistent in the DCA work done. Although in this case maybe when someone has planned it well it can be consistent when doing DCA but in the end things that are considered not a problem can actually interfere and make this a big problem so we cannot underestimate this especially since consistency is a fairly crucial part of doing this strategy.

Actually, it doesn't need to be that complicated because in the end when we start to invest, it is certain that as much as possible we already have a plan and process for how the investment goes well, especially for a beginner who sometimes doesn't even think too much because the mindset of most beginners is actually quite simple where they will only buy without caring too much in terms of bitcoin prices or the current situation, so that when they already have an allocation to invest they will immediately buy it without thinking too long.

As for when talking about cash flow, it should have been arranged from the start because it is actually quite simple in this case when we have managed the money well then we have got a budget of how many percent we will allocate or to be used as an investment that we will do. So in this case when the allocation that we want to do, for example, is around 10 percent or it could be more or less depending on readiness, then there is definitely a picture that we will do later. for discretionary needs that you alluded to, actually it can follow because in the end the need depends on your lifestyle and is not a reference in investing in the end even though this will be able to disrupt the course of investment that you do when your needs and lifestyle are too excessive.

For you to be able to make fine profit in DCA method of investing you need to be consistent with your investment, consistency is not what is hard to put in practice in the DCA method because you do not need to invest with the amount of money that will be a burden to you financially, but just with the fund you can afford. In DCA method you don't need to save money to invest, you can as well invest the smallest amount of money that you can afford at the moment, no need stressing yourself to save up a certain amount of money before you can invest in bitcoin.

It may not really matter so much what we call the various kinds of back up funds, except to try to communicate some of our ideas with some level of understanding, and if you put the ideas into practice then it might start to make more sense why we might have various kinds of back up funds.  Surely anyone who is managing their own finances (which might even still apply when living with your parents) should be learning how to categorize differing kinds of priorities, determining monthly income versus monthly expenses, and yeah maybe some additional complication comes from investing into something like bitcoin for 4-10 years or longer since there would be some needs to be able to put the money aside and not to think about it for a long time.  Sure you can look at it and analyze it, yet it seems that to really get the value out of the investment in terms of also considering it as a long term investment, there should not be any need to tap into it while it is still being built, and surely in traditional systems it tends to take 30-40 years or more to get to fuck you status (which means that you would be able to quit your job and live off of your investment), and so with bitcoin there could be some abilities to cut that time in half to 15-20 years, yet it still tends to take a long time to build an investment, build good habits and to resist tapping into the good investments or trying to trade the good investments (such as bitcoin). 

Even if the bitcoin investor might not necessarily be looking to getting to fuck you status, there seems to be values in regards to building a bitcoin investment over many years of one or two cycles or more rather than merely thinking of playing the investment wave with it.

Maybe I can try to clarify the terms..?  There are various kinds of back up funds, which is emergency funds, reserve funds and cash float.

Emergency funds should be something that you do not tap into absent a real emergency such as loss of income and/or unexpected increase in expenses, and they should be at least three months of expenses.

Reserve funds would be funds that could be tapped into or even set aside for various reasons, and they could be or should be used prior to tapping into emergency funds.

Cash float is merely various amounts of money that you might keep from month to month that carry you over within the month when you might not be sure exactly about your exact expenses or your exact income amounts

If you are new to investing, you might not have very good cash management practices, and they might not even be necessary, so many normal people who do not invest may well ONLY keep between about 2 weeks and 4 weeks of extra cash cushion, yet when you invest in something long term and so volatile as bitcoin, I would think that it becomes a priority not to tap into the bitcoin investment for any reason except completely of your own choosing, and so even when bitcoin is going up and down in the first 4-ish years of investing, it could become tempting to tap into it, yet it may well not be a good idea, especially if you are trying to build it to get up to some kind of a meaningful size, which like I suggested could take a quite a long time to get there for most normal folks. .and they may well never get there if they are not engaging in good practices to continue to be building their bitcoin investment by ongoingly buying it, especially in their first cycle or two.

Sure there could be some exceptions of guys who are able to build their bitcoin investment faster and able to front load their bitcoin investment,  yet most commonly those are going to be folks who might have already been investing for a while, rather than a brand new investor more likely would be mostly working from his cashflows and trying to increase his income and to keep his expenses under some kind of meaningful control in order to allow himself to invest at the level of aggressiveness that is comfortable to him.


You are still implying that there is some kind of need for various assets besides bitcoin and cash, which truly is not the case for beginners. If you happen to have other assets besides bitcoin and cash then yeah you might need to account for those other assets, yet if you are referring to fucking around with shitcoins, then you are likely bringing your own level of complications, which is not necessary.  it seems that earlier you had referred to physical assets, and you were suggesting that there was some kind of need to manage such things, and yeah, if you already own some other assets, then you might need to consider how to manage them, but if you don't already have them, then I see no reason to be getting worried about managing any assets beyond just bitcoin and cash, at least not for your first cycle or maybe even your first couple of cycles.. Sure at some point, maybe you bitcoin stash and even the amount of cash that you are managing might justify that you start to put some cash in other investments, perhaps properties, equities, bonds, commodities and/or cash/cash equivalents, yet those are not beginner level requirements, and even someone investing $100 to $200 per week (or maybe 10% or more of his discretionary income) into bitcoin might still take 5 years or longer just to get to the point that he had invested a whole year's income into bitcoin.

Ultimately each person has to figure out for himself when he might start to feel that he has too much allocation into either bitcoin and/or cash and if there is some needs to invest in other assets.

Give me time to become more educated and I thought that the need to distinguish between backup funds and floating cash was not important. So we must prioritize these two funds for investment which can positively influence the long term trend of investment. It can be a bit difficult for newbie or low income investors to manage two funds simultaneously. However, I think it would be advisable to keep the backup fund for a maximum of 6 months and the floating cash fund should be for a maximum of 1 year. Later, as their financial situation improves, they can increase the amount of their cash fund proportionally with the increase in Bitcoin in the portfolio.

Yes it is very important that a newbie investor should give more importance to cash flow as with discretionary income they will accumulate bitcoins regularly and should continue this process until the stack size is decent. An investor should opt for asset management at the next level of decent holdings. I totally agree with you because an investor's abundance of wealth depends on adequate holdings.

Yeah, spot on.

Basically it's in the name, DCA stands for dollar cost averaging, which means that you will get lower highs but also higher lows. A more moderate approach.

In contrast, lump sum basically takes all the available fiat from the period and buys in a single instance. This means you will get higher highs, but also lower lows. High risk approach.

In reality, most people don't have a lump sum to invest, so DCA is the most common approach by far.

Bitcoin transaction fees don't always rise up, if it is rise up it will not last long. Fees increase for very short time but I think it is not a big problem for investors. Temporarily DCA holders may worried due to high transaction fees of Bitcoin. But the biggest loss at that time is those who are small investors. What we can do to solve this issue is to temporarily hold our funds on a centralized exchanges so that they can be re-transferred when the transaction fees come down. Anytime Bitcoin transaction fees may increase so instead of panicking investors should be patient. I think people who really want to hold Bitcoin they don't consider it as a major problem.