💠 Definition:
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Dollar cost averaging (DCA) is a strategy that enables traders to invest their money in separate batches and over a certain period of time instead of investing it all at once. Thanks to this, the risks of purchasing a particular currency are expected to decrease all at once, as a sudden and significant decline is likely to occur at any moment. It is also expected that the individual’s chances of correctly calculating the average general rise and fall in price will improve.
💠 How to work by adopting the DCA strategy:
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👈 Let us take an example of a trader whose capital is (100 USDT) and wants to invest it in a specific currency. He can invest the entire amount (100 USDT) at once, and here he has taken a risk in this deal, especially if he later discovers that at the time of his purchase the price was so high that it is difficult for him to do so. If his mistake is corrected, if this trader uses the dollar cost averaging (DCA) strategy in which he divides (100 usdt) into ten equal amounts, and invests 10 usdt each time, then in this way he is most likely to buy assets when prices are low or high as well. Which will ultimately result in a better average purchase price than if the entire $100 usdt was spent at once.
💠 Strategic Advantages-DCA:
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👈 The DCA strategy plays a major role in reducing the average currency purchase by buying regularly, whether the market is going up or down. Also, the trader can buy more when the price is low and buy less when the price is high. In this way, the trader avoids buying at the peaks or selling at the bottoms. This strategy also helps reduce the pressure and fear when buying or selling that a large percentage of beginners and those who do not have a clear investment strategy suffer from.
