Are You Losing Money With DCA?

in LeoFinance2 months ago

Everyone is talking about Dollar-Cost Averaging (DCA). So it must be a good strategy and you can make a lot of money with that. You started doing DCA, but now you feel you are losing your money.

Are You Losing Money With DCA.jpg

When BTC was 30K, it showed strong support. It seemed the price would go up from that level. You started investing regularly. BTC price keeps falling and you keep buying. Now BTC price is around 19K.

You are nervous now. You calculate how much you have invested so far and what you will get if you sell your holding. It shows you lost your money. People get scared and fear that the BTC price will go below 15K and lose more. If you sell your BTC, you will still lose your money.

Maybe you thought that 30K support would not break and BTC price would go up to hit 100K. As a result, you would make a huge profit. But that did not happen till now and there is no sign it will happen any time soon.

DCA is not magic, it is a popular investment strategy. It is up to you how you use this strategy. If you think short-term, you are not supposed to do DCA. Bitcoin did not hit 100K, does it mean it will not hit 100K and go beyond that?

Think long term and select assets before doing DCA.jpg

When you think long term, you don't have any plan to sell any time soon. BTC price drops, it does not matter because you want to see what would happen after 5 or 10 years. The volatility of BTC will not make you nervous. You basically don't lose anything unless you sell your BTC.

You cannot just throw your money randomly and call it DCA. When you make an investment, you plan for it and move forward according to your plan. If you need money in a short period of time, you will not invest that in the first place.

You define your investment amount, and how often you will invest, it can be weekly, biweekly and monthly, or any other interval. You have to decide when you start doing DCA. Some people may start DCA now, some people did that earlier, or some people just wait and plan to start DCA later.

You have to do your analysis and research to choose the asset you are going to invest in. If you make mistake choosing the asset, you may lose money whether you follow DCA or any other investment strategy.

Knowing technical analysis basics can help you make better financial decisions. It is not that you look at the chart all the time. You can see the overall market situation from the chart at a glance. You can decide when to start DCA and how long you will keep doing DCA. And you have to be consistent when you follow the DCA strategy.

What I shared here is not financial advice. I am expressing my thoughts and sharing my opinions. Do your research and analysis before making any investment decision. I will not be liable for your actions.

So what do you think? Please feel free to leave your comments. Thank you for reading this post. That's it for now. I'll be back with another post.

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Hi, I am Rezoanul Vibes. I'm a content creator and passionate learner. I write about lifestyle, finance, martial arts, and digital marketing. I'm glad to meet amazing people all over the world.

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It's the truth and DCA works well for things that you know will increase in price in the long run. It could take years for the fundamentals to catch up and the price to catch up.

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It could take years for the fundamentals to catch up and the price to catch up.

Yes, it takes time. If you don't plan for the long term, DCA may not work for you.

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I addressed this a few times some time back, and also dedicated an article to it. It is wise to cease DCA during a collapse or onset of a bear market. Commencing a DCA strategy now would however be a reasonably good move... essentially, it's a strategy for the "average Joe". If you have market knowledge, it makes no sense to continue buying while an asset continues to fall. You simply wait and then commence once there is a reasonable indication that a bottom is in or at least close...

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If you see the BTC chart, it shows clearly how the is moving. It moves in trend and the price keeps falling until it breaks. Having the market knowledge will help you make a better financial decision. Even if you wan to do DCA, you can define the time when you should start doing DCA.

Thank you for your feedback!

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And you have to be consistent when you follow the DCA strategy.

You are absolutely right, Mr. @rezoanulvibes.
Consistency is the basic attitude to have when choosing this strategy. Actually, any strategy would require this attitude, right?
This business has a long-term scope. One possibility is to expect a miracle with a significant improvement in a short period of time. That is also one possibility, but very small. It's ridiculous to expect miracles in a market. !LOL

This is very good thinking, and you really have a broad view with your experience of being involved in it.

We all wish to have a miracle in the market! LOL...
But the thing is, in a downtrend market, there is way less chance to see anything like that. People expected to see some price movement after Ethereum moving to proof of stake. It did not happen yet.

Thank you @justbabybee for taking time to read this post and sharing your thoughts!

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