Dollar-Cost Averaging – A Deceptively Simple yet Effective Investment Technique
When is the best time to purchase Bitcoin or other cryptocurrency? There is an investment technique called dollar cost averaging that ensures that you will not go wrong whether you’re buying or selling cryptos. No one knows the right time to buy something, but using techniques like dollar cost averaging allows you to be correct either way.
Dollar cost averaging is buying a fixed amount on a regular schedule no matter what the cost is. The trick is to never put or pull it out all at the same time unless something crazy happens. You buy every day or a week or month regardless the price. For example, you have $1,000 and you want to buy $100 worth every week. Sometimes the price will go up, sometimes the price will go down, regardless what happens you buy $100 per week.
On some exchanges, you can even set your account to buy every day, week or month automatically. You can do the same on the sell side. That is, make sure when prices are peaking and you wish to take some profits off the table, you aren’t selling everything at once. Instead, just take a little off the table at a time. When prices go down again, put back a portion of what you pulled out previously. When it peaks gain, take some of your profits off. And repeat the cycle over and over again.
The trick is to take profits off from time to time, but make sure not to pull everything out at once. Because in trading, the number one rule is to stay in the game. If you have no money left in the game, then you can’t play at all. Therefore, seasoned investors use the dollar cost average investment technique–a simple technique but one that will result in great rewards.
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