Everyone tries to time the market by predicting lows and highs but In reality both stock & crypto market have proven the fact that timing market is a tedious task and requires a lot of time, analysis and knowledge. So how should one plan for a superior way of entering a position?

DCA i.e. Dollar Cost Averaging or SIP i.e. Systematic Investment Plans can be a relevant investment strategy.

In this article, we will try to achieve three goals:

1. Explain the concept of Dollar Cost Averaging and compare it with lump sum investing.

2. Provide empirical support to show why DCA provide superior returns

And lastly, explain how one can opt to start DCA through DZap.

What is Dollar Cost Averaging?

DCA simply means scaling into a position. DCA is a strategy where one invest small amounts at regular intervals irrespective of the market condition (bull or bear).

Let’s say it is 1st of January 2022 and you want to buy $1200 worth of Ethereum (ETH). You have two choice:

1. Buy $1200 worth of ETH at the current price, or

2. Break down this trade into 12 block trade of $100 each and buy them periodically each month for a year.

The second way is called dollar cost averaging. The logic behind this is simple. By not buying lump sum right away, you are protecting yourself from a potential downside and securing yourself a better average price per trade.

In a market where volatility is pretty normal, compounding could result in better returns because every percentage counts. DCA may ensures stable returns over a period of time, the only thing which is of utmost importance here is Patience & Regularity. Whatever the news may be or how the market is reacting, you need to be regular in your investments to get stable returns.

How Dollar Cost Averaging provide superior returns?

Let us take an example of four tokens, i.e. Shiba Inu, Ethereum, Apix & Dogecoin, and analyse what would the return be if you would have invested in these tokens in the last cycle

If you would’ve invested $10 weekly from 1st Aug’20 to 11th June’22, the returns would look like:

• Shiba Inu ( +2780160% )

• Ethereum ( +42% )

• Apix ( +548319% )

• Dogecoin ( +534% )

Portfolio Returns are whooping +832000% OR +832K% ( Gas fee Not Included). This is the power of DCA

How to invest in DCA?

Step 1: Build a portfolio by researching about different tokens or by selecting a set of tokens. Example: Invest in just ETH or invest in set of tokens like ETH, BTC, MATIC, etc.

Step 2: Choose the amount you wish to invest and choose the interval (Daily, Weekly, Monthly, Quarterly, etc)

Step 3: Select a platform to start the DCA. One of the few project that will provide decentralised and secure DCA is DZap. You can choose to invest either manually by batch buying or automated DCA where DZAp does it all for you.

DZap will soon roll-out DCA feature. And this feature will be very useful for long term investors, retail investors or passive investors who wish to INVEST rather than TRADE. Follow DZap socials for more updates.

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