What is DCA? - Many people often say that DCA means buying whenever the price drops, but that's only half right. If you understand this method better, you will have a more suitable investment plan.
DCA - Dollar cost averaging is a method of accumulation investment (the term originates from the book by Benjamin Graham). Applied to the crypto market, there are 3 ways:
1- Buy averaging over time, meaning you will buy a fixed amount of assets over a fixed period, for example, buying $100 of BTC every week for many years, buying without looking at the price. The overall average will still be at a good price range (this theory is also popular in the stock market, it can be considered a way of saving combined with investing).
2- Average by price range. That is, whenever it drops by a certain percentage, you will buy a predetermined amount, so the average purchase price will gradually decrease, aiming to have the best possible position.
3- Combine these two methods. Buy regularly over time within a certain price range. Once you surpass this price range, stop buying.
Many people do not understand the principle and call buying different orders DCA, but that is not entirely correct. It can lead to buying too much in overbought areas (if you keep buying at the peak, you will lose a good position) or buying too little in good price areas.
The goal of DCA is to find a good position or accumulate as much "inventory" as possible for a limited amount of capital. Because no one can buy at the bottom and sell at the top.
Finally: The method created is a tool to use, so everyone should balance its application to suit themselves, ensuring good capital management and a good position. It should not be too mechanical.
I have bought DCA $BNB to hold.
