Doge GEMSIf you are interested in learning about averaging but don’t know where to start, then you are welcome to join our article on 3 effective Dollar-cost Averaging strategies in Crypto. to learn more about this strategy. Along with that are the special things that Dollar-cost Averaging can bring.
What is Dollar-cost Averaging?
The first thing that we need to learn is the concept of Dollar-cost Averaging, also known as the averaging strategy. You can simply understand that this is a method of dividing investment capital into investments. Instead of us pouring capital massively into a project, now we apply the Dollar-cost Averaging strategy, we will break that capital into small parts maybe 30/30/40 to invest. in installments.
For the sake of brevity, we can name the averaging strategy DCA. DCA is an acronym for Dollar-cost Averaging.
With this investment method, investors can limit risks at the highest level. In addition, it also helps to stabilize the value and is not affected by psychological factors when the market fluctuates up or down.
What is Crypto?
Crypto – Cryptocurrency is one of the cryptocurrencies operating on the Blockchain platform. Crypto acts as an intermediary system, as an exchange of users in the process of exchange and transactions.
This is also one of the platforms that are not influenced by the government and is controlled by agencies and administrative organizations. In addition, transactions and customer information are encrypted and absolutely secure, and cannot be faked and spread out.
The process of using Crypto is similar to when using actual cash exchanges such as VND, USD, and EUR,… only Crypto is a currency, an object of exchange and valuation in cyberspace. . Crypto has two types that are coins and Tokens.
The question is, should you invest in the averaging strategy? To clarify this question for you, we invite you to learn about the effective averaging strategies in Crypto.
3 Effective Dollar-cost Averaging Strategies in Crypto
To show you the real power of DCA we’ll give you live proofs to show you what the averaging strategy has delivered in Crypto.
The first is the benefits that investors get from the average strategy in Crypto. One of the first benefits that investors can see clearly is that it doesn’t matter if it’s the right price, it doesn’t matter whether it’s at the top or at the bottom. The second is to limit the impact of emotional investment. In fact, many people are affected by this factor when the market price fluctuates. The third is to reduce risk, keep the exit for yourself and open up other potential investment opportunities. Finally, it is possible to invest “capital contribution” when you have limited capital.
You can refer to 3 effective averaging strategies in Crypto as follows:
DCA averaging strategy over time
With limited capital and a salary-based monthly growth cycle, the time-average strategy is perfect for you.
There are retail investors who often choose DCA over time because of capital issues. Every month they will spend a part of their salary to make an investment.
Most people who follow this method only buy for about 3-4 months and only invest 1-2 more times and soak their capital in the project and have no transactions or capital into the project during that time. . On the contrary, in that only 1-2 purchases, they bring back a very large number.
DCA moving average strategy when the market is up
Buying the bottom and selling the top is the main and common goal of all strategies and DCA is no exception. To be able to fully utilize the DCA strategy when the market is trending down, we need to understand the stages in the Bullish process.
In this growth process, there are usually 5 stages that investors need to understand: accumulation, growth, distribution, price reduction and initial re-accumulation. In order to bring high profits thanks to the DCA campaign, we will invest small amounts of capital in the accumulation stages to gain a foothold, followed by different levels of capital poured into the capital break phase.
DCA moving average strategy when the market is down
The market going up and down is obvious, so we need to come up with long-term business strategies that bring high profits but are least affected by the market. The average strategy when the market is up is to split the amount of capital to invest many times, the DCA strategy when the market is down is similar. The process of investing when the market falls requires investors to be very stable to be able to buy at low prices. This process is noted to be a lot harder than when the market went live. To be able to invest, buy the most, with the cheapest price and have a certain foothold, we should apply the DCA average strategy to be able to invest in many different prices, which can be as follows: the bottom price you’ve been wanting for a long time.
Even if you apply the Dollar-cost Averaging strategy, you also need to have calculations and predictions about market trends to bring the highest return on investment. However, DCA should also not be applied to markets with constant volatility, unable to grasp the trend.
Above are 3 effective averaging strategies (Dollar-cost Averaging) in Crypto that we offer and you can refer to. Choose to invest in potential projects and apply DCA to minimize the risks that market fluctuations bring.
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