DCA stands for Dollar Cost average. According to DCA strategy, investors purchase any asset at regular invterval. There are few pros and cons of DCA.
DCA has lower risk. There is high risk involved if you spend all your investment at one risk. DCA give you liberty to purchase any asset on a regular interval of time which decrease your risk. Crypto market is one of the most volatile market of the world. In more volatility better approach is to invest in multiple steps. It helps to lower your average cost specially if you add more investment after dip.
Investment in multiple interval make DCA more affordable without putting any extra burden. In fact, it is easier for user to invest in multiple interval to keep the remaining investment intact which may be used in another project.
Investment on regular basis also help you to avoid emotional investment beside discipline your investment. Emotional investment is based on greed or fear which eventually may give a big loss. You can avoid this loss by adoption DCA strategy.
Cons.
Multiple investment increase your transaction expanses. Investment on regular basis required more transaction fee which can be avoided by paying in one step. Although the transaction fee is high but still it is relatively safe as single transaction may give you big loss if the price drop down further.
DCA is a long term investment and rate of return is also lower than spot trading. You can earn more through spot trading at the cost of high risk.
Personally I like Dollar cost average as it minimize your risk. What is more effective than minimizing risk in one of the most volatile market of the world. What is your opinion my friends?
This is it for my today post. Wish you all a very happy, healthy and prosperous life ahead. Have a nice time.