S4B Crypto Contest - Season 13

source

INTRODUCTION

Hi Steemians, hope everyone is doing great in the community! Deliberating on issues related to crypto is necessary as it keeps one informed and educative. We are all here in this platform as a result of the information and the education we got, working hard on the believe that, the knowledge gotten would aid us to navigate through the steemit ecosystem.

This contest topic hosted by @waqarahmadshah is apt, as it would provide us with more needed knowledge on the crypto space, especially on this steemit ecosystem. It brings us together to share or exchange ideas to promote the steemit ecosystem.

I now move to discuss the issues that are been raised by @waqarahmadshah in the contest.

DCA EXPLAINED

source

Dollar Cost Averaging (DCA) is trading strategy that has to do with buying a certain or stable amount of coins on frequent basis at whatever price the coin is trading.

The plan here is that the trader makes a trading schedule to buy some certain amount of coins constantly say on frequent basis, like in every 7 days or weekly, or even monthly as the case may be.

STEPS/GUIDES FOR DOLLAR—COST AVERAGING

When a trader has decided to use the dollar Cost Averaging in trading, the following steps or guides below could be followed:

• Setting a budget:
  Here, you need to determine how much that would be easy for you to be investing on a constant basis.

• Decide Your Periodic Investment Intervals:
  Make a decision on how often you would be making your investment. It could be on weekly or monthly basis. Whichever is convenient for you.

• Choose A Reputable Investment Exchange Platform:
  Look out for reputable investment exchanges that offer DCA investment options. You make your savings in the platform automatic for your periodic payments.

• Start making payments into your DCA platform to purchase your coins or tokens

Having subscribed to your preferred exchange for your DCA, you can now start making payments into your account at the pre-set orders that you made.

• Keep A Watch On Your Investment
  The exchange would keep buying coins at your pre set savings orders. You just have to make sure that your account is protected by using a non custodial wallet. This would enable you to hold your investment for the long period you anticipated without a compromise to your account.

The Market Conditions Effective For DCA

source

The market condition effective for dollar cost average is when the market is fluctuating ups and downs. Not when the market is in constant uptrend or constant downtrend.

The Limitations Of Dollar Cost Averaging

The limitations in using the dollar - cost average strategy includes the following:

• When the market is on persistent rising, only few coins or tokens could be bought as the prices are rising.

• If the market declines persistently, buyers remain in the market when they should have exited.

CONCLUSION

Using the dollar– cost average could be suitable for newbies in the market as the challenges encountered while trying to time the market, is taken care of.

While using the dollar– Cost Averaging, have it in mind that investing in large amount could be more beneficial in the long run, than little in little amount.