With the current market trend, everyone is most likely in the red and for many they are seeing huge drops in their portfolio along with holding onto bags (trades gone negative). If you are in this situation, there is a method that you can use called DCA (Dollar Cost Averaging) in order to help yourself out a little to take advantage of the "cheap" prices of the coins. This strategy is a little safer than what I blogged about in a previous blog regarding "flipping" coins but with it being safer also means that you need to have a bit of capital set aside in case things go south.

You can read my other blog post regarding flipping coins when the market is bearish below:
https://steemit.com/cryptocurrency/@maniac199/what-is-a-position-double-your-money-in-5-days

So what is Dollar Cost Averaging? Well simply put its investing your money at different times and price points in order to mitigate price swings. For example, if you have $12,000 to invest, some financial advisors will have you invest $1000 a month for a year. The result is that at the end of the year you will have invested across various price points and swings and as such you will have a position that falls somewhere in the middle of the swings the stock is prone to do. Now as the stock grows or declines, you are much closer to the average and hypothetically should not lose as much but on the same token not gain as much. Weather this method is better is debatable however one thing that it is great at is protecting you on losses such as the current market.

Strategy

So the basic strategy is that you want to set anywhere from about 3 - 7 levels. These are your buy in points. You will also want to determine if you want to double down or what each level will require. Obviously the more levels you go with the more capital you need to set aside to protect your investment. For this example I will use 5 levels. I will also assume that it is a boring market (sideways, not bearish or bullish). Now one thing we can always expect is that when a price is moving up or down, it will do so in waves. This means that it will drop a few percent, climb a few percent, and drop some more etc. Your goal with the levels is to try and identify these drops and climbs. You can do this using straight percentage points or you can try and identify levels of support. Either way will work, obviously identifying the support levels though will be more effective.

So I select the following levels for my DCA: 3.5, 4.5, 5.5, 6.5, and 7.5. (Remember, this is for a boring market, for a bull market I would use smaller levels and for a bear market larger levels). I will also be using the double down method which means that at each level I will be doubling the previous level.

The Math

Now for the fun part.

In the above chart, you can see the results for a 5 level DCA. I ran the calculations on both the normal, double down, and triple down methods. Each has pro's and con's but the best of both worlds is the double down method as it provides the least amount of needed capital compared to the best margins for the cost. The columns should be pretty self explanatory but for clarification the AVG column is the new break even point after the purchase, and the % difference is the amount the price must go up from the last buy point to hit the break even point in percent. As you can see with the double or tripple method, after the first level, we just need a 1% or less increase to break even. Following normal market trends, this is usually accomplished in most patterns during a retracement. While the tripple gets us closer to the break even point, the cost to do so does not really justify the means.

Capital Needed

This is the next complicated part. When I first was investing, I was using between 10% and 25% of my capital per trade and would have about 3 - 5 trade pairs going at a time. As you can see, I was not using DCA and even if I was, I would not have been able to go much past level 2 or 3 on many of the pairs. My current strategy involves me only putting 3% of my capital into each trade for a max of 10 trading pairs active at any one time. While this means that I need to do more trades in order to reach my 1.5% per day capital gain, I can do so knowing that I will rarely get stuck with bags because I can always DCA my way out. The exception to this is super bear markets like we have seen in the last 48 hours. During these super bear markets unfortunately, the only thing you can really do is wait. Once the market returns to some form of ups and downs (even if its bearish) you can re calculate your DCA amounts so that you can lower your AVG to a point that is more attainable in the short term.

I hope this helps, if you have experience or use similar strategies, please let me know. If you have questions or need more details also comment and I will answer you. Coming up in the next day or so is going to be my bot tutorial so keep an eye out for it!

NOTE: I am not a financial advisor and this is just my opinion. Before making any investment please make sure you do your research and fully understand what you are investing in!