A DCA (or “Dollar Cost Averaging”) strategy is the practice of investing into a currency at preset intervals to reduce the entry price of a position over time and mitigate volatility risk.
This strategy is heavily promoted by youtubers, bloggers, exchanges, algorithmic companies like 3commas.io, cryptohooper.com, etc. And is based on the trading style: “Buy the dip” or “Drop more buy more”.
Based on our criteria and experience, this is the worst trading strategy. We have the following observations:
– Liquidity Problem: You will need a lot of money to keep up, and in the end, you will get stuck.
– Time: If, due to lack of experience, you started using this strategy at very high points and the market reverses to a bearish trend for 2 months to 2 years, you will only see your investment depreciate every day. In the last cryptocurrency bear market, many cryptocurrencies depreciated by 90%, and they still haven’t reached their all-time high value.
Our recommendation is to never use this strategy, you are here to win, not to buy high and sell low.
This strategy is heavily promoted by youtubers, bloggers, exchanges, algorithmic companies like 3commas.io, cryptohooper.com, etc. And is based on the trading style: “Buy the dip” or “Drop more buy more”.
Conclusion and Analysis
Based on our criteria and experience, this is the worst trading strategy. We have the following observations:
– Liquidity Problem: You will need a lot of money to keep up, and in the end, you will get stuck.
– Time: If, due to lack of experience, you started using this strategy at very high points and the market reverses to a bearish trend for 2 months to 2 years, you will only see your investment depreciate every day. In the last cryptocurrency bear market, many cryptocurrencies depreciated by 90%, and they still haven’t reached their all-time high value.
Our recommendation is to never use this strategy, you are here to win, not to buy high and sell low.