Did you know that 98% of day traders lose money? Most people think that they are smarter than everyone else, and that they will be the 2% who are profitable. While we know that our community of investors is on the cutting edge, statistically speaking it’s still likely that most of you reading this have lost some money trading. The truth is: even the best traders do not win 100% of the time.
Are you tired of trying to time market tops and bottoms? Tired of spending countless hours staring at charts, only to find yourself on the losing side of the trade? Tired of FOMOing / ape-ing into a trade only for it to crash and burn? Do you have trouble knowing when to take profits? Then it’s time you adopt a set strategy that uses both time and volatility to your advantage. That strategy is called: Dollar Cost Averaging.
Now is a great time to mention that this article is not financial advice. The purpose of this article is to educate Midas users on what DCA is. Before making an investment decision, you should always do your own research and consider consulting a financial professional.
What is Dollar Cost Averaging?
Dollar cost averaging is simply entering and exiting positions over time rather than all at once. This can look a number of ways. A very common DCA strategy that many utilize is saving for retirement. Every paycheck, a predetermined amount of money is set aside to invest in retirement accounts. No matter what – if the market is up or down – that money is invested, lowering risk and exposure.
It should be noted that the DCA strategy is not a trading strategy, but an investing strategy. That said, it should be used with a long-term view. It doesn’t matter what the market does over the course of a day, week or even month. Rather, our window is years.
Imagine if you invested just $100 per month in Bitcoin every month for the past three years. Doing so from January 2019 until now, you would have 0.346 BTC, worth $13321! This is with a principle investment of only $3800. That’s over a 250% return on investment. Note that you would still be in profit even though BTC is down nearly 50% from all time highs. The DCA strategy + time = resilient portfolios!
The Weighted Portfolio Strategy
Say you don’t have $100 per month to invest – that’s ok! You can still participate. Maintaining set proportions of coins in your portfolio has a similar effect. Let’s say that you had $1000 to invest, and you decided that 50% would always be in USDC and 50% always in BTC. At the end of each month, you buy or sell to get both back to 50% in terms of dollars. This has the effect of buying low and selling high. It takes all of the emotion out of investing. It takes very little management. This is the principle behind the YAPs offered by Midas.
Supercharging Dollar Cost Averaging Strategy
Midas is here to make all of our users wealthy. Our platform rewards long term holders by providing them with a passive income on top of price appreciation of your assets. For example, BTC pays out a massive 13% APY on deposits, and 20% on stablecoins! These returns are unmatched anywhere else in crypto. If the DCA strategy + time = a resilient portfolio, DCA + time + Midas = a supercharged portfolio! That is because the interest compounds your gains. Over time, this becomes more and more significant.
The DCA strategy is an investment strategy – not a trading strategy. If implemented methodically and patiently, positive results are easy to achieve. The DCA strategy is not a get rich quick scheme, rather it is a time-tested way to build wealth over years. Stop trying to get rich by tomorrow and focus on long term goals. Your rate of success will be much higher, and you will be happy with yourself for making good decisions.