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The Best Bear market Solution, Diving deep into Dollar Cost Averaging (DCA)

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@sanjamkapoors
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Greetings everyone, This is Sanjam here and today I had a very good day watching the world cup which was so enjoyable but the main topic here is the most important thing for an investor in the market which is the DCA. If you have patience and are good at doing this, you will be having a very fruitful time in the financial markets n matter if it is stocks, cryptocurrencies, or Forex.

This is mainly for the long-term holders because in short term you are just going to be buying at once and will be selling very soon, as soon as your profit target gets achieved.

What is DCA?

I already shared what it stands for, Dollar Cost Averaging so in very simple words what it means is that you will not be buying everything at once for your investment but rather in small portions, during various phases of the market therefore in 2 words you will be doing "slow accumulation".

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Now let us understand DCA with an example:

For example, we take the coin Leo by Leofinance only. Let us assume its price is $1. You are having $100 for your investment money. Imagine this situation.

The high Leo coin did was $2 and it has dropped by 50% and now you feel it is a good time to buy so for that you do not have to straightway buy $100, Leo, using all your money at once but rather you will buy a small quantity say for $20.

Now you have 20 Leo tokens for $20 and you are left with $80 now.

After a few days or weeks, Leo's price drops by another 25%, taking it to $0.75. you are at a loss on your 20 bucks but comparatively very less if you would have put your all 100 bucks, now you want to buy some quantity, again and again, you thought of buying for $20.

You will be getting around 27 Leo tokens. This sums up to 47 total Leo tokens in your portfolio where you spent $40 and are left with 60 now.

If you would have purchased $40 worth of Leo at a $1 price, you would have gotten less quantity and more loss.

Then after a month, Leo's price drops to $0.5 and now you feel it is very undervalued and must buy with most of your money you put your $40 more leaving with $20 for some other time.

You purchased 80 Le tokens for $40.

This sums up to 20+27+80 = 127 Leo tokens for 80$. Going back to the $1 mark, if you would have purchased with 80 bucks at that time then you would get 80 but now you are got 127, almost 50% more quantity.

1 year later, you check Leo's price and see it is $5, you sell all your at that place. Considering both cases again. In the first case, you have 80 Leo tokens, now as they are worth 5 bucks each and you sell, you sell it for $400.

In the second case where you did small accumulations and did a good DCA, you have 127 tokens and you sell them at $5 each, your whole order would be $635.

This is the whole concept of DCA at a basic, easy level. This is a small amount, take it to thousands or bigger value then this hits even hard.

You can take a video reference too, which will be making your mind even clearer and probably also clears some of your doubts.


There is an alternative option to DCA which is known as SIP which we will be talking about some other time. Man whales, big influential investors build their strong portfolios in the same way only like if you go to Twitter you will be reading that this whale purchased this amount of Shib tokens, that amount of ship tokens. What are they doing?

They are accumulating it, they are not putting their millions of dollars at a single time, they have a brain, there is a reason they are whales and there is a reason they keep themselves as whales and not like us who blew our portfolios in no time.

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DCA is also very helpful if say like there is a sudden crash in the market just like with FTX, if you remained with some of your funds and were just waiting for a lower price to come so you can buy, therefore it always keeps an opportunity open for you to buy in the market at the rates you want.

You just need to manage your money, which means the percentage of the money you are using in your buying like 20% of your portfolio, 5%, 13%, etc. doing 50-50% is not a DCA you know.

You need to know when to buy when you feel this is undervalued. Do not jump to do DCA with a random shitcoin. Coins like Matic, BTC, eth, Leo, hive, etc. are some of the example choices.

Even though I do DCA with Leo tokens although I am not having that many funds but I do very small buying to keep myself active in the market and also learn to build a great portfolio, not good but rather great.

Buying CUB, Polycub, Sports, Doom, etc., are the major HIVE growing projects which I feel can flourish in the bull phase.

This is just like as the saying goes...

"Slow and steady, wins the Race"

Thanks for going through the post and I hope you must have attained value from it and also, later on, enjoyed it, I am glad if you did. Rest, this all is not financial advice but rather my thoughts being shared here and also just for entertainment purposes. Keep having fun and remember the world cup, LeoFinance is also an official sponsor of the Hivebuzz world cup contest therefore, keep supporting them and the community. Have an amazing rest of your day! SANJAM

Posted Using LeoFinance Beta