The Dollar Cost Average Idea (DCA)
The acronym "DAC" stands for "Dollar Cost Averaging."
It is one of the investment methods that traders and investors in the cryptocurrency or forex markets employ to gradually allocate capital to a cryptocurrency asset. In a nutshell, "Dollar Cost Averaging" (DAC) is a strategy used by investors to invest a whole amount of money in little amounts over a specific length of time rather than all of their wealth at once.
Now that you understand it, dollar cost averaging (DAC) is a method that aids traders and investors like you and me in minimizing the consequences of short-term market volatility. The tactic aids traders and investors in amassing sufficient wealth to create one stream of investing capital.
DAC enables you to avoid using up all of your capital (cash) when an asset might become bearish. In the event that you decide to purchase an asset and the item's price decreases while you are using dollar cost averaging (DAC), you will have a greater chance of profiting from the asset if it increases in value.
One of the best tactics I suggest for anyone who is still learning how to trade or wants to be a smart investor is dollar cost averaging. I do suggest DCA since it saves you time from watching the market to choose the ideal moment to buy the item.
Now that you know what DCA stands for, let's use the example below to practically examine it for a better understanding.
Let's assume, for the sake of clarity, that Peter is an engineer who makes $4,000 per month. He learned about STEEM coin in the latter half of 2021 and chose to put $400, or 10% of his monthly income, into the cryptocurrency. Peter decided to share his weekly allocation of investments because he is already aware of DCA.
Peter has now acquired STEEM worth $120 per week and $400. Mike continues to purchase throughout the year using his DCA knowledge, shelling out $5,200 on STEEM purchases overall. As a result, Peter's investment grows to $7,000 by the end of the year, a gain of more than 31.8%.
Now, continuing with our example, Peter would have profited almost 105% after turning his $5,200 into $10,400 had he used the same approach earlier, before 2021.
I'd like to use the same approach once more. He would have increased his $10,400 to a significant sum of money—approximately $40,132.
We can see from looking at Peter's example above that dollar cost averaging is something that consistently doubles our money, so I encourage you to consider it and properly explore DCA.
How to Use Dollar Cost Averaging to Grow Your Portfolio (DCA)
There are three things you must understand and adhere to in order to raise your portfolio investment using DCA:
- The asset you wish to buy
- How much money are you ready to invest weekly or monthly?
- When will you make a purchase?
| 10% Goes to @ph-fund |
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