DCA Strategy Trading



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”.

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.