Have a clear understanding of what DCA means

Vaculin

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Quote from: Rikafip on September 19, 2023, 02:07:52 AM

Quote from: Hatchy on September 19, 2023, 01:06:33 AM

It's crucial to watch how the market goes up and down and change your DCA plan if needed.

The whole point of using DCA is not having to consistenly check the market and obsess & stress about price fluctuations. Instead, you are supposed to buy the bitcoin at the regular intervals no matter the current price, beliveing that price in the long term will go up.

What you explained is basically trying to time the market, which in the end is more about luck than anything else and is opposite of DCA.

Regardless of how the market moves and whatever its price at the moment, DCA is still encouraged since the whole point of it is to mitigate risks by buying at different prices, as long as your goal is to hold them for longer term by not panicking whenever a current price dump occurs. That is to lower the risk from market volatility, and to increase your chances of making you profitable when you decide to sell them at a very reasonable price.

KiaKia

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The exact amount that is big to you might be small to me, it depends on the person that wants to DCA, plans are different, the salaries of everyone on here are also different, you can be able to afford using $500 for weekly DCA into Bitcoin and I might be able to afford $3000 every week to DCA every week, our results will never be the same.

Either it's weekly or monthly, price actions of Bitcoin will also not stays the same, but honestly, it's just an unnessecery discussion, DCA is DCA, evwnry one knows their capacity, and how long they want to DCA for, to me it will work eventually no matter what strategy you use to accumulate your Bitcoin.

The only difference will be amount, how much you are able to DCA into Bitcoin on the long run is what will determine what you will real when the bull market is here, some investors have no fixed price, this week it could be $200 and next week it could be $400, it doesn't matter, but your commitment will bring you the best results in the end.

stompix

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Quote from: pawel7777 on September 25, 2023, 05:16:43 PM

Quote from: stompix on September 23, 2023, 10:36:41 AM

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I don't think the sky will fall if one month you buy for $99 instead of $100 or buy on the 2nd instead of on the 1st of the month. I see it more of a spectrum than a binary thing.

We're not talking here about buying $99 instead of $100 or the next day because your internet was off.
Let's start again from my first post in this to which you replied:

Quote from: stompix on September 22, 2023, 07:51:12 AM

Quote from: SeriouslyGiveaway on September 18, 2023, 08:05:07 PM

You even don't have to use a same amount of capital for each DCA round. Sometimes you can use smaller or bigger amount of capital for a DCA round. Because it can depends on your feeling about the market trend as well as your available funds for DCA at that time. If you see the market is good and you have money in hands, you can DCA with doubled capital than your normal amount.

That's gambling!
DCA is dollar cost average, when you break this rule it stops being DCA and as I said is basically buying based on a hunch or your guts.

The user to whom I replied mentioned clearly that you can "fine tune " it by buying based on market trends.
No way, there is little no way in hell you can say this is still DCA when you buy guessing on what might be next!

Changing your dates from one week to a month or a day, and changing the sum from 100 to 200 for the next month, it can still be called DCA.
But buying for $100 for two weeks then two days later throwing $1000 on a whim and then not buying for 6 months cause you think it will go down is everything BUT DCA!
How can you even have an average here?

pawel7777

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Quote from: stompix on September 23, 2023, 10:36:41 AM

The thing is pretty simple, once you cut the "average" word out of it, it stops being dollar cost average, just as ice cream without ice is no longer ice cream is at best just cream!
So if you buy based on guts and instincts random sums at random intervals it's either RDC or GRT or PNGYSHYT but for sure not DCA.

The whole point of this strategy is to keep risks of high volatility at a minimum and to spread the investment sums, If you do it randomly why would you even call it DCA and lie to yourself you doing some strategy?

But there's no cutting out the "average" at all. You will still have an average price even if the purchase amounts or timing are not 100% consistent.
I don't think the sky will fall if one month you buy for $99 instead of $100 or buy on the 2nd instead of on the 1st of the month. I see it more of a spectrum than a binary thing.
Every strategy can be tweaked or modified. It's not like you either have 100% adherence or complete randomness.

darkangel11

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Quote from: Macoach on September 18, 2023, 05:45:41 PM

Imagine the current price of BTC is $20,000, and you're a high-earning individual looking to invest in this asset. If you make a lump sum investment, you would acquire one BTC at a cost of $20,000.

However, with DCA, you spread that $20,000 across five equal $4,000 purchases, resulting in costs of $20,000/BTC, $15,000/BTC, $5,000/BTC, $5,000/BTC, and $25,000/BTC. This approach yields an average cost basis of $18,000, and you'd have 2.3 Bitcoin. When Bitcoin's price eventually rises, your gains can be amplified because you lowered the average cost of acquiring your holdings. With DCA, you steadily accumulate more Bitcoin, even during market ups and downs.

To illustrate, your first purchase acquires 20% of 1 BTC at $20,000. The second purchase, at $15,000, gets you 26.66% of 1 BTC. Your third and fourth purchases, both at $5,000, result in a total of 80% of 1 BTC with each buy. Your final purchase, at $25,000, represents about 16% of 1 BTC. In total, you've accumulated around 2.3 BTC.

Plot twist:
After your first purchase bitcoin goes from 20 to 25k and your friend who bought a lump sum has 25% profit (5k), while you have 20% of that.

I'd call DCA is a good strategy when you have constant inflow of money, but no savings, or you don't want to touch those savings for whatever reason.
So, you earn 1k a month and want to spend $100 every time you get your paycheck on buying bitcoin. That's great!
If you have 20k in the bank just sitting there and earn 1k on top of it every month, don't DCA, just allocate 10% of your savings or whatever you feel comfortable with.

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Quote from: Macoach on September 18, 2023, 05:45:41 PM

DCA involves consistently investing smaller, equal amounts over time, as opposed to making large, irregular crypto purchases

I don't understand, why are you saying that the investment amounts are smaller or equal over time? They can also become bigger: oftentimes people who chooses this strategy is because they have limited amount of money available, let's think about an employee for example, so every month after he gets his salary he has new money available. But if he gets promoted then that investment could also go up of course if he doesn't change his lifestyle.

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Quote from: mk4 on September 18, 2023, 09:00:51 PM

You can technically do it like this and twist the strategy in whatever way you want, but the main purpose of DCA is to just buy an equal amount every time, to eliminate the psychological/emotional factor of markets. Changing the amounts every time kind of defeats the purpose of doing DCA.

Yeah, that's what I thought it was like. I think the point is not to get a better deal than when spending a big sum at once, but to avoid thinking about when's the right moment to buy. So a person chooses something more or less fixed in terms of amounts and dates, and just keeps going without worrying whether it's a good or a bad moment, whether it's better to wait or to risk it. This way you have a routine, and it doesn't require overthinking the process or doing any research. It successfully helps accumulate Bitcoin without all that.

stompix

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Quote from: pawel7777 on September 22, 2023, 04:59:28 PM

Quote from: stompix on September 22, 2023, 07:51:12 AM

That's gambling!
DCA is dollar cost average, when you break this rule it stops being DCA and as I said is basically buying based on a hunch or your guts.

If you want to be a purist then maybe. But DCA doesn't have any hard, legal definition. Modified DCA is still DCA, poorly executed DCA is still DCA.

Falling with your car down a cliff is still driving since the engine is still running and you're still at the wheel! The thing is pretty simple, once you cut the "average" word out of it, it stops being dollar cost average, just as ice cream without ice is no longer ice cream is at best just cream!
So if you buy based on guts and instincts random sums at random intervals it's either RDC or GRT or PNGYSHYT but for sure not DCA.

The whole point of this strategy is to keep risks of high volatility at a minimum and to spread the investment sums, If you do it randomly why would you even call it DCA and lie to yourself you doing some strategy?

Quote from: serjent05 on September 22, 2023, 05:13:08 PM

So buying during the lower lows is way much better than blindly following a weekly basis buy schedule since the price may get higher during our scheduled buy time. If that happens, it beats the purpose why we are doing this DCA thing.

How do you know which are the lower lows?
Imagine somebody who has believed in the 40k then 35k then 29k it's the lowest Bitcoin could drop and bought all in and now he's looking on the side with all the money spent waiting for the pump!
Do you know what that was? Gambling, putting his money on the table on a hunch!

kingvirtus09

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DCA is simple to understand; we know that it is already used by most people here in the crypto space. Do it when you have a purchase of Bitcoin or altcoins that you can use to provide good savings in the future. The others do it with a fixed amount, or they base it on a percentage, and then they deduct that from their salary.

So it also depends on you, and the best thing to do so that you don't have a hard time with DCA is that when you have the opportunity to buy, you should buy there, but hopefully not for a long time, as long as you have extra money every week. you used to save.

lombok

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DCA is my favorite strategy. And it has proven to be effective with the long-term investment targets that I am planning.

Although there are market discrepancies when using DCA, in my opinion DCA is only effective in the spot market with long-term goals and when the market is bearish like this year. And DCA is not suitable for the futures market, especially with a double model for each open position, for example the first order position is to buy long BTC at a price of 29,500 with funds of $100, then the second order position is 28,300 with $200 and so on, if BTC experiences a flash dump then the risk of being hit by Margin Call will be very high. And in the futures market, there are many liquidity hunters, perhaps if we use funds that ignore Money Management, we will be subject to Margin calls even though we use the DCA system.
That's just my thoughts.

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Quote from: Salahmu on September 23, 2023, 04:27:52 AM

To me DCA method is very nice especially the beginners because as a beginner investing on Bitcoin you could get overwhelmed and start investing aggressively without knowing you could run out of funds and as such making you to sell some of your investment to attend or sorts your needs but with DCA method your mindset of accumulating will change were as you will be guided on how to accumulate with a little funds but more consistent and plans for reserve funds or rather emergency funds that would take care of any needs that arise and keeps you consistently accumulating, so DCA may have other loopholes but is actually good for the beginners for risk management were as they feels more relaxed and rest of mind but it will take a long time to accumulate enough using DCA.

The DCA approach may be the bitcoin industry's best-kept secret. Ever pondered why so many individuals rush in, make huge investments, and then lose everything? Perhaps because certain factors favor it that way. When beginners lose, someone else profits.

By consistently investing with DCA, you're defying the unspoken "rules" set by the high and mighty of the finance realm. You're not their ideal client; you're too careful, too wise. Sure, it'll take time to build a significant stash, but isnt time on your side when you're not playing into their hands?

Salahmu

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To me DCA method is very nice especially the beginners because as a beginner investing on Bitcoin you could get overwhelmed and start investing aggressively without knowing you could run out of funds and as such making you to sell some of your investment to attend or sorts your needs but with DCA method your mindset of accumulating will change were as you will be guided on how to accumulate with a little funds but more consistent and plans for reserve funds or rather emergency funds that would take care of any needs that arise and keeps you consistently accumulating, so DCA may have other loopholes but is actually good for the beginners for risk management were as they feels more relaxed and rest of mind but it will take a long time to accumulate enough using DCA.

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Quote from: Macoach on September 18, 2023, 05:45:41 PM

However, it's important to note that DCA may not always work in your favor. In some situations, it could increase your average cost, especially during a bull run. Nevertheless, the purpose of DCA is to spread your investments incrementally, which can be advantageous in the long run. It provides a balanced approach to accumulating assets, ensuring you still acquire your desired cryptocurrency. I hope this explanation sheds light on the essence of DCA.

Despite being the best strategy that one can follow until the next bull run. There will be the pros and cons depending on the individual's situation. But for me, there's really no disadvantage on it because you're not obliged to invest a lot and you'll just do it religiously or when you're able.

The beauty of this strategy is that you're not pressured, you don't have a forceful plan that you need to fill it when you have or no money at all.

Stress free strategy but very effective.

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I do not like the DCA method, because you are forced to buy at regular intervals and you cannot capitalize on the fluctuations in the price. I think it is better to buy low and to sell high.

I would much rather hoard when the price are high and buy when the price is low and then sell again and acquire more bitcoins when I use the increased profits from the coins that I sold at a high price. Cool

WatChe

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Quote from: serjent05 on September 22, 2023, 05:13:08 PM

You can always modify your DCA, I also believe what @pawel7777 stated. I also think that when to execute the buying time is a crucial thing since I believe DCA is not meant only for a regular basis of buying but rather it is also used to average down our entry price.

So buying during the lower lows is way much better than blindly following a weekly basis buy schedule since the price may get higher during our scheduled buy time. If that happens, it beats the purpose why we are doing this DCA thing.

You need to settle your buying pattern even if you are doing DCA. Buying more when price is high and less when price is down is of no use to me. Right now price is down and there is anticipation in the market that price will go up to 30k, so there is more benefit in DCAing right now then if price reaches 30k. There is no fix pattern for doing a DCA, you have to mix your own strategy about when to buy more.

Mauser

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Quote from: Macoach on September 18, 2023, 05:45:41 PM

DCA involves consistently investing smaller, equal amounts over time, as opposed to making large, irregular crypto purchases. Think of it as making payments for a product in installments, at regular intervals, until the total is paid off. When you regularly invest in your preferred cryptocurrencies, you automatically accumulate more assets over time, regardless of market fluctuations. This can help you grow your holdings and potentially reduce your overall average cost during market dips.

I am a huge fan of the DCA method and would recommend it to anybody that is looking for ways to add crypto currencies to their portfolio. Finding the optimal time to buy and sell our coins is nearly impossible, it requires a lot of research and even then, we still need some luck to hit the exact bottom or top to make the best possible trade. Trying to chase these optimal timings can become frustrating and that is why I like the DCA method so much, we acknowledge the issue and look for an alternative approach. The traditional DCA method works great when you have a large amount of money that you are looking to invest in the next few months. In my situation it's a bit different, I don't have any large amounts of money to invest and can only save a part of my salary each month. In that case I relax the DCA requirements a bit and don’t buy a fixed amount each month. For anybody like me that has different amounts available each month I would also recommend to just buy the coins each month and don’t worry so much about the purchase price each time, on average it should be a good price.

serjent05

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Quote from: Stepstowealth on September 19, 2023, 12:30:57 PM

Quote from: mk4 on September 18, 2023, 09:00:51 PM

You can technically do it like this and twist the strategy in whatever way you want, but the main purpose of DCA is to just buy an equal amount every time, to eliminate the psychological/emotional factor of markets. Changing the amounts every time kind of defeats the purpose of doing DCA.

I will not be comfortable as a person already used to DCA a fixed amount of money based on my income, and then my income increases considerably and then I keep investing that same small fixed amount because I do not want to change the amount. I will like to raise the amount I use. Things can also go the downwards like, maybe my income reduces considerably, and I can no longer continue to invest that amount of money which I saw as small, but now is big. I will not like to stop investing, It will be good for me to just reduce the amount I DCA. So maybe changing the amount to DCA with does not entirely defeat purpose of DCA, there are some times when the continuity in the habit will matter more than the change in amount.

You can always modify your DCA, I also believe what @pawel7777 stated. I also think that when to execute the buying time is a crucial thing since I believe DCA is not meant only for a regular basis of buying but rather it is also used to average down our entry price.

So buying during the lower lows is way much better than blindly following a weekly basis buy schedule since the price may get higher during our scheduled buy time. If that happens, it beats the purpose why we are doing this DCA thing.

pawel7777

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Quote from: stompix on September 22, 2023, 07:51:12 AM

That's gambling!
DCA is dollar cost average, when you break this rule it stops being DCA and as I said is basically buying based on a hunch or your guts.

If you want to be a purist then maybe. But DCA doesn't have any hard, legal definition. Modified DCA is still DCA, poorly executed DCA is still DCA. I don't think most of the investors who choose to follow the strategy would care about the payments and timing being 100% the same all the time. Small deviations won't do much harm. And to do it properly over a long time, you should account for inflation as well, meaning the amount of each purchase should be adjusted for the inflation rate.

stompix

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Quote from: SeriouslyGiveaway on September 18, 2023, 08:05:07 PM

You even don't have to use a same amount of capital for each DCA round. Sometimes you can use smaller or bigger amount of capital for a DCA round. Because it can depends on your feeling about the market trend as well as your available funds for DCA at that time. If you see the market is good and you have money in hands, you can DCA with doubled capital than your normal amount.

That's gambling!
DCA is dollar cost average, when you break this rule it stops being DCA and as I said is basically buying based on a hunch or your guts.

Quote from: Stepstowealth on September 19, 2023, 12:30:57 PM

I will not be comfortable as a person already used to DCA a fixed amount of money based on my income, and then my income increases considerably and then I keep investing that same small fixed amount because I do not want to change the amount. I will like to raise the amount I use. Things can also go the downwards like, maybe my income reduces considerably, and I can no longer continue to invest that amount of money which I saw as small, but now is big. I will not like to stop investing, It will be good for me to just reduce the amount I DCA. So maybe changing the amount to DCA with does not entirely defeat purpose of DCA, there are some times when the continuity in the habit will matter more than the change in amount.

This is completely different.
If you have averaged a buy of $100 a week for a year and then you get a pay rise and afford $200 it doesn't mean you're not DCA anymore, you can think of this like having two plans, one that started two years ago and one that started now.
If we would think like that basically nobody in countries with 100% inflation would be able to keep a DCA over the years, imagine somebody still buying bitcoin worth 10 Zimbabwe dollars when a loaf of bread went from 1 to a trillion.

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Quote from: Stepstowealth on September 19, 2023, 12:30:57 PM

Quote from: mk4 on September 18, 2023, 09:00:51 PM

You can technically do it like this and twist the strategy in whatever way you want, but the main purpose of DCA is to just buy an equal amount every time, to eliminate the psychological/emotional factor of markets. Changing the amounts every time kind of defeats the purpose of doing DCA.

I will not be comfortable as a person already used to DCA a fixed amount of money based on my income, and then my income increases considerably and then I keep investing that same small fixed amount because I do not want to change the amount. I will like to raise the amount I use. Things can also go the downwards like, maybe my income reduces considerably, and I can no longer continue to invest that amount of money which I saw as small, but now is big. I will not like to stop investing, It will be good for me to just reduce the amount I DCA. So maybe changing the amount to DCA with does not entirely defeat purpose of DCA, there are some times when the continuity in the habit will matter more than the change in amount.

Well said mate, I also that the continuity is what really matter because DCA doesn't really have a specific fixed amount you are supposed to use but rather its about the continual and constant buying of small fraction of Bitcoin from your little earning because buying Bitcoin from your hard earn physical cash to save it what I think it's really the major reason of people actually doing it.

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