Dollar-Cost Averaging (DCA) Strategy:

A Step-by-Step Guide

Let's say you have $500 to invest in Polkadot (DOT), currently priced at $4.50. To maintain a DCA strategy, divide your portfolio into 4-5 parts.

Step 1: First Buy

- Buy 30 DOT at $4.50: 30 x $4.50 = $135

Step 2: Wait for a 7% Market Drop

- Wait for the market to drop by 7%: $4.50 x 7% = $0.315, new price = $4.20

Step 3: Second Buy

- Buy another 30 DOT at $4.20: 30 x $4.20 = $126

Step 4: Wait for Another 7% Market Drop

- Wait for the market to drop by another 7%: $4.20 x 7% = $0.294, new price = $3.90

Step 5: Third Buy

- Buy another 30 DOT at $3.90: 30 x $3.90 = $117

Calculating the Average Cost

- Average cost = (4.50 + 4.20 + 3.90) / 3 = $4.20

Result

- You now own 90 DOT with an average cost of $4.20.

- If the market price returns to $4.20, you can sell all your DOT without any loss.

- If the price goes up to $4.40, your return would be: 90 x $4.40 = $396, profit = $396 - ($135 + $126 + $117) = $18

By following this DCA strategy, you can reduce the impact of market volatility and potentially generate profits.