what is DCA (Dollar Cost Average)

What is DCA?

DCA full form is:  Dollar Cost Averaging

Let's say you have $100 and you decide to allocate 5% of your portfolio per trade. If you take a long trade on Bitcoin (BTC) at $28,000, and the price drops to $27,200 or any lower value, you can implement DCA.

With DCA, you would open an additional trade at the lower price, investing another 5% of your portfolio. This means you will have invested a total of 10% of your portfolio after implementing DCA.

The idea behind DCA is that by adding to your position at a lower price, you can bring your average entry price closer to your original entry price. For example, if the price eventually rises back to $28,000, you would be in a profitable position due to the reduced average entry price resulting from DCA.