Dollar-cost averaging
Invest a fixed amount on a schedule and stop trying to time the market.
What it is
Instead of trying to guess the perfect moment to buy, you invest a fixed amount at a fixed interval, for example 100 every month, regardless of the price. When prices are high your fixed amount buys fewer units, and when prices are low it buys more. Over time your average entry price smooths out.
Why people use it
Timing the market consistently is extremely hard, even for professionals. DCA removes the timing decision completely, which also removes most of the stress and the temptation to chase pumps or panic-sell dips.
Worked example. You buy 100 of a coin each month for four months at prices of $10, $8, $5 and $10. You now own 10 + 12.5 + 20 + 10 = 52.5 units for your 400, an average cost of $7.62, below the average price of $8.25, because the low month automatically bought you more units.
What to watch out for
- DCA works on assets you believe in for the long run. It does not protect you from an asset that keeps falling for years. It only averages your entry into it.
- It underperforms a lucky lump-sum buy at the bottom. The point is that nobody knows where the bottom is in advance.
- Discipline is the whole strategy: skipping the red months defeats it.
Run it with CryptoAlertly
- Add your long-term assets to the watchlist.
- You do not need price alerts to DCA, but a 24h move > 10% alert on each asset tells you when something unusual happens between your scheduled buys.
- Some people add an extra buy when a big red day fires the alert. That is a personal choice, not a requirement.
- Test the idea first in the strategy simulator: pick DCA, roll a few different markets, and watch how the average smooths out lucky and unlucky years.
Turn this into real alerts
Free plan, no card needed. Set a price target and we email you when it is crossed.