Word of the day | Dollar Cost Averaging (DCA)

Word of the day - DCA

Dollar Cost Averaging (DCA) is a strategy where you invest a fixed amount of money in regular intervals, regardless of the price of the investment.

In simple terms, it means consistently putting a set amount of money into an investment, like stocks or cryptocurrencies, on a regular basis such as monthly or quarterly.

With DCA, you don't try to time the market or predict when prices will go up or down. Instead, you focus on investing a fixed amount at regular intervals. When prices are low, your fixed amount will buy more shares or units. When prices are high, your fixed amount will buy fewer shares or units. Over time, this strategy can help smooth out the highs and lows of the market and potentially reduce the impact of short-term price fluctuations on your investment. The idea behind DCA is to take advantage of market volatility and potentially lower your average cost per share or unit over the long run.

Buying in this manner is considerably less of a strain on your emotions and financially it's far less risky as well.

An example of DCA buying would be to purchase $10 in bitcoin per week, for a three-year or longer period of time.

https://www.dbm.academy/faq for more blockchain vocabulary.