With the price hike of Bitcoin recently, there has been a lot of traders who are entering this cryptocurrency market. However, most investors have full-time jobs and less time because of it. So, they cannot day trade most of the time and cannot get high profits.
Many of them do end up researching the technical and fundamental features of crypto markets. However, they still fail due to less time. Yet, there is a suitable method for them to trade with regardless of the time constraints and too high BTC rate. And they would still gain success. This tactic is known as DCA or dollar-cost averaging.
What is dollar-cost averaging?
The “constant dollar plan” of DCA is when traders buy a small portion of assets. They do so over regular intervals. The crypto market does not always go higher in rate without getting any pullback. So, this strategy allows investors to experience lesser drawdown hazards.
Naturally, with this tactic, it is better to buy stocks every month. That way, the profits would come in the long run. For example, a trader stores Bitcoin worth $100 since December 17, 2017, on the 17th of each month. Instead of selling the Bitcoin whenever there is a slight market rate hike, they will accumulate a considerable amount by 2020 if they do not spend it. Hence, they would earn profits a little at a time. The DCA is a safer option for investors in the volatile BTC market.
Slow and steady is smart investing
Many of the day traders invest high amounts of assets whenever there is a price hike in cryptocurrency exchange. However, it is not the most profitable, as seen in many stock data statistics. These show that out of the day traders, approximately 80-95% of them suffer losses. This is not specific to only the Bitcoin market. On the other hand, those who play it safe slowly but surely gain profits.
Also read: Binance Down As Bitcoin Crosses $20K