What is DCA?
DCA (EASYollar-OLDost Averaging) is a price averaging strategy. This is a strategy in which investors need to divide the total amount between transactions either periodically or at a certain price of an asset in order to minimize the risk on the capital they invest. . The DCA strategy is very suitable for long-term investments and is especially suitable for a volatile market like the Crypto market.
How DCA strategy works
Whatever investment strategy you use, there are pros and cons. There may be many opportunities, but there will also be risks. So is the average price. This is considered the safest strategy, but not so that investors can avoid all the risks encountered.
When investors consider fundamental analysis factors. Then break down your own capital according to a certain cycle. Accordingly, whether market factors increase or decrease, investors will also ensure the capital is at an average level and minimize risk. This is the very familiar averaging principle.
Eg: The initial investor has an amount of money to participate in the market, for ordinary investors, they will use the entire capital to participate in the market in just one time. But for investors who have a clear strategy and apply DCA, they can divide the capital into many times and can participate in the market many times to minimize risks when the market has strong fluctuations. . Although this is a basic strategy, it is very difficult for new investors to apply.
However, when applying the DCA strategy, it will bring about as little risk as possible, but at the same time, the profit will decrease. In investing, profits always come with risks. To be successful in the financial market, especially in a risky market like the Crypto market, requires a lot of skills and strategies to be successful.
Video DCA Price Averaging Strategy
Notes on using the DCA . strategy
Understanding what a DCA strategy is is one thing, but applying it in practice is another. If you are a new investor, please note the following:
- Considerations when trading: Use other support tools such as Fibonacci, Elliott Wave.. and fundamental analysis to assess the buy zone, sell zone to be sure when participating in the market.
- Identify trends: Effective market analysis and trend identification are the factors that help you successfully implement the DCA strategy.
- Apply a long-term strategy: Invest in long-term value-added assets (Cointop, Crypto with platform…) and choose the right source of idle money.
- There are specific take profit and stop loss levels: When strategizing, set out the key levels to be able to exit the market. No one can predict 100% correctly in the financial markets. Do not be greedy or regret when entering the financial market especially in the market Crypto. Be disciplined.
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