Dollar-cost averaging explained: why it lowers your average price

Dollar-cost averaging (DCA) means investing the same amount at regular intervals, whatever the price. It takes away the stress of trying to pick the perfect day to buy.

A simple example

Say you invest $100 at five prices: $42,000, $38,500, $35,000, $39,800 and $44,100. The simple average of those prices is $39,880. Your real average buy price is lower, about $39,634, because $100 buys more coins when the price is low.

When DCA works well

• You plan to hold for years, not weeks.
• You want a habit instead of guessing the best day to buy.
• You can afford every planned purchase, even if prices fall.

Know the risks

DCA does not protect you from a long decline. It only spreads out your entry price. Check your result at any target price with the crypto profit calculator, and if you stake what you buy, estimate rewards with the staking rewards calculator.