Over 60% of crypto investors and traders lose money today trying to time the crypto market. In the crypto industry today, you can make money or build wealth consistently over time using the right strategies . 

Most newbies in the crypto industry make investments because they see others do the same thing without any strategy. This is different from how it should be, except if you want to lose money.

No one truly wants to lose, which is why we’ll cover one of the best strategies to use while investing in crypto, called dollar-cost averaging (DCA). 

In this article, you will learn how to trade profitably using dollar cost averaging and its benefits and drawbacks. 

What is Dollar Cost Averaging? 

Dollar-cost averaging is mainly used by crypto experts and some newbies planning to make long-term investments in the crypto market. Although this strategy can also be used when buying in other financial markets, such as bonds and stocks, the crypto market is our primary focus. 

Dollar-cost averaging is an investment strategy that allows you to invest a defined amount of money at specific intervals. Using this strategy, you don’t just invest money in something other than the market. Instead, you take predetermined steps regarding the amount of money and the time you invest, which can be daily, weekly, biweekly, etc.

The significant advantage here with dollar cost averaging is that it helps one make gains after a long time and minimizes the loss one might face from the ever-fluctuating market. Dollar-cost averaging is not for those who need to make quick money but for long -term investors who can wait a long time for their investments to mature. 

How Dollar Cost Averaging Works

Source: SimpleCryptoGuide

Dollar-cost averaging works for both beginners in crypto investing and those who have been in the crypto market for a long time. Most people use the dollar cost averaging strategy for buying Bitcoin, but it can also be used for other cryptocurrencies such as Polkadot, Litecoin, Ethereum, Tron, and others. 

The first thing to do when using the dollar cost averaging strategy while investing is to list the cryptocurrencies you want to invest in and the amount of money you have to spend on them. For example, suppose you have $240,000 to invest and want to buy Ethereum . 

To apply the dollar cost averaging method of investment here, you need to break the money you have into the months or years you can wait for the investment to gain profit. 

For instance, you can invest $240,000 for two years using the DCA strategy. Since there are 24 months in 2 years, investing about $10,000 every month will give you $240,000 in 2 years. The purpose of dollar cost averaging here is that it helps you to consistently make investments over time while minimizing the losses you suffer. 

Benefits of Dollar Cost Averaging

The significant benefits of using the dollar cost averaging strategy are that you can minimize the loss you suffer due to emotions and build wealth consistently over time. 

One major thing that affects crypto traders and investors is emotions(fear and greed), which have caused many people to lose their money several times. With dollar cost averaging, you set a goal for the amount of money you will invest in a cryptocurrency over a certain period. 

This means you won’t be affected by emotions, whether the cryptocurrency’s price is going up or down. With an already set goal, you look forward to the long-term rewards of the cryptocurrency instead of looking at the temporary rise or fall in price . 

Another advantage of the DCA investment strategy is that it is straightforward; someone with a few hours of experience in the crypto industry can learn about it quickly. All you need to do is set the specific amount of money you want to invest and the investment period . 

Source: Blockchain for Everyone- Unlock the Secrets of the New Millionaire Class

Drawbacks of Dollar Cost Averaging 

Dollar-cost averaging has very few disadvantages, and the major one is that it takes more time to make money in the crypto market. You can engage in activities like day trading if you are searching for a quicker solution to making money with cryptocurrencies. 

You must wait longer for your profits with dollar cost averaging, which can take up to a year. Dollar-cost averaging is not dependent on the recent happenings of the crypto market. Instead, it focuses on the profit a cryptocurrency will gain over an extended period. 

Also, keep in mind that the fact that it focuses on long-term profit does not necessarily mean you will gain those profits within that time. This is a reason why you need to do good research on a better cryptocurrency before making any investment. 

Best Dollar Cost Averaging Strategy To Use 

Here are some of the best dollar cost averaging tips and strategies to increase your profits and minimize losses. 

Choose What Works For You 

One of the best things about the DCA strategy is that it does not pressure you to keep up with recent market happenings. You invest according to the amount of money you have and the time you can wait for the investments to make profits. 

For instance, you can have about $100 and still practice the DCA strategy, while another person may have $10,000 and still do the same thing. The goal here is to invest depending on what you can afford, so long as you are consistent with it. 

Research and Evaluate Before Investment 

As mentioned above, using the DCA strategy in the crypto market does not necessarily mean that you will make a profit after the period you set elapses. To avoid building castles in the air, research and evaluate the crypto you want to buy before investing. 

One of the best research strategies in crypto is community information, which is why BingX, a social trading platform, is critical. You can chat with other traders interested in similar cryptocurrencies and get their thoughts. 

One of the worst things you could do is invest in a cryptocurrency with no potential for price growth in the future. 

Rebalance Your Portfolio Constantly 

The crypto market constantly fluctuates, so you must reevaluate your crypto portfolio from time to time to ensure that you only invest in high-return assets. 

If a cryptocurrency you were investing in experiences some issues, such as rug pulling, you can check your portfolio to remain on track. 

Source: Cryptowisser TradingView & BingX

Use A DCA-friendly Crypto Exchange

BingX is a leading social crypto exchange in the world with a presence in over 100 countries and operational licenses in many countries, including the United States, Canada etc. 

At BingX, you enjoy fantastic platform trading features, including the Autobot trading feature. This could also help you set up trading rules for your preferred dollar cost averaging, sparing you the agony of staring at trading charts daily. Beyond that, they also offer subsidy Vouchers to help minimize any losses incurred during trading.

BingX also offers other trading products such as spot, futures, grid, social, copy trading and, most recently, signal trading.

conclusion 

Dollar-cost averaging is a simple yet powerful way of building wealth using cryptocurrencies. 

One of the significant advantages of dollar cost averaging is that anyone can start using the strategy immediately, which helps minimize losses for an investor. 

While using the DCA strategy, conduct research before buying any cryptocurrency. BingX remains the best place to trade cryptocurrencies today. The platform offers fantastic support and intelligence reports that help you make better trading decisions. 

Trade with us and join our BingX Community to get all the latest updates!

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