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When we decide to invest in cryptocurrencies, we may try to buy the coins at the cheapest possible price and leave them until their price increases. But once we add digital assets to our investment portfolio, we just want the cryptocurrency to rise in value. In many cases, this process causes investors to wait for the market to rise. But why not invest in these currencies. So in this article, we will find out what is the explanation of the dollar cost averaging (DCA) strategy  and what distinguishes it

The Binance platform offers its clients an investment practice called Dollar Average Cost (DCA) . It is designed to know when is the best time to invest.

Meaning of DCA

It is an abbreviation of the phrase  Dollar Cost Averaging  , which means in the Arabic language the average cost of the dollar, and the first letter of each word was extracted to become our DCA. It is an my investment abbreviation 

DCA Strategy Discovery History

The American economist Benjamin Graham, in his book "The Intelligent Investor", described the average cost of the dollar as a kind of "investment". Its gist is that "a person invests the same amount of dollars in common stocks every month or every three months. So you're likely to get a good price out of the process."

As Graham loved the way this strategy works. Lucille Tomlinson studied this strategy well for years and summarized it as follows: "No one has yet discovered any other investment formula that can be used with such confidence in ultimate success, no matter what may happen to stock prices."

Of course, these studies were conducted more than 70 years ago, but recently DCA has become popular among crypto investors due to its relatively low level of risk.

What is the Dollar Cost Average (DCA) Strategy?

Knowing the ideal time to buy a crypto asset is very difficult as you can choose the right time and you can go wrong, and as a result you may lose a large part of the potential profits. 

You must also know that this investment strategy loses you a lot of time and nerves. Whereas, the DCA strategy mitigates technical analysis errors.

Where by investing in small parts, you are likely to make more profits than the investment amount in one go. The main thing for this process is to correctly determine the price range.

Disclaimer DCA strategy does not excuse the investor from thinking before making a decision as it only mitigates the risks of investing in cryptocurrencies.

Explain how to use DCA on Binance?

If you do not already have an account on the binance platform, you need to create one. To create an account go to , click Register and create an account with an email or phone number, you will need to fill out the registration form, accept the Terms of Service, and confirm your email address or mobile phone number using the six-digit code sent to you.

Then you need to prove your identity by opening a webcam and taking a picture while you are holding one of the identification cards (passport, personal card)

• Well if you already have a Binance account, all you have to do is

1. Log in to your account.
2. Click "Buy Cryptocurrencies" in the upper left corner of the home page.
3. Select "Credit Card" from the dropdown menu.
4. Select the currency in which you will invest and the paper asset for payment.
5. Activate the "Normal Purchase" option in the lower line of the form and set the frequency of business.

Note : The options available are weekly, half-weekly and monthly. And you can set the date and time for a recurring purchase. And don't forget to save your settings.

• Proceed to choose a payment method:

1. Click "Change Map".
2. Choose "Pay with a new card".
3. Enter your number, issue date and CV.

Each user can save up to five Visa / MC cards, linking each to a plan for the recurring purchase of a particular cryptocurrency. Once everything is set up, order details will be available. But you should confirm the transaction in one minute, because the price will be different after that. 

Once the order is confirmed the purchase will be completed, the paper money will be deducted from the card and the cryptocurrency will go to your exchange deposit.

The next operation will take place at the specified time. But if there is not enough money on the card, the order will be transferred to the next date. Purchases will be repeated until you delete or change the plan. The Stock Exchange can also terminate normal transactions at any time through your news.

How to invest in DCA

A newbie who wants to use the additional automatic investment option on Binance should:

1. Top up your deposit with BUSD or USDT stablecoin.
2. Open the Binance Earn section and go to the Auto Investing tab.
3. Choose the currency you will invest in.
4. Select the validity period of the automatic investment option (from 3 months to 3 years) and click the "Create plan" button.

A window will appear on the screen in which you need to specify the frequency of purchase (once a day, once a week, once a month). Then you need to decide how much you will invest each time (minimum 10 BUSD) and the time of the transaction. You can activate the use of the balance of a variable term deposit. But with insufficient balance of funds in the cash portfolio, self-investment assets will be recovered from the deposits. After that it remains to click on the "Confirm" button and an automated investment plan will be generated.

And in this section, you will need to regularly replenish the cash wallet with BUSD or USDT assets, the rest will be performed by the system itself.

How to find out my earnings with the dollar cost averaging (DCA) strategy

You can calculate the effectiveness of your chosen DCA strategy by buying Bitcoin cryptocurrencies on the website . Complete the DCA setup form and the system will graph and display the percentage of estimated earnings.

The Bitcoin Investment Calculator will help you explore the different DCA options and see how your portfolio is performing. This can help you determine the best investment strategies.

Pros and Cons of the DCA Strategy

The DCA strategy looks very attractive, but of course it has its drawbacks. So let's take a look at the pros and cons of this investment method. Let's start with the positives.

1. DCA reduces the risk of buying at the current maximum.
2. There is no need to invest big money on the first day.
3. You have time to study the crypto market better.
4. DCA doesn't let you worry.

Now let's move on to the disadvantages of this strategy.

1. DCA makes it nearly impossible to buy cryptocurrency at a bare minimum.
2. DCA does not offer instant profits.
3. Low readings in a strong bull market. 

The first and last two points are very serious disadvantages of the DCA strategy. But keep in mind that it is very difficult to calculate the current minimum cost and predict a sharp rate increase, and for beginners it is almost impossible.