[Updated 1.2024]


You bought EDCOIN at a higher price and it's dipped below that price now. You feel stuck. Can DCA help?


Absolutely! Dollar-cost averaging (DCA) can be a powerful tool for digital asset enthusiasts facing a price dip. 



Here's how:


1. Lowering Your Average Cost:


Imagine you bought 10 EDC at the initial price of USD0.20 per EDC for 10 EDC x USD0.20 = USD2. 


Say, EDC now sits at USD0.04 per EDC. Your EDC portfolio is clearly underwater!


Using Dollar-cost averaging (DCA), you could acquire smaller amounts regularly (say, USD10/week). If EDC stays low, you can buy more EDC, bringing down your average cost per coin.


Let's say after 4 weeks, you buy 40 more EDC at USD0.04 per EDC. Your total acquisition is now USD2 + USD1.60 (40 EDC x USD0.04) which is a new total of USD3.60, but you own 50 EDC! 


Your average cost per coin is now USD3.60 divided by 50 EDC which makes it USD0.072 per EDC instead of USD0.20 per EDC!


If the price of EDC reaches USD0.10 per EDC, you would no longer be underwater but you would be up 38.88%!


2. Taking Advantage of Price Swings:


HODLing at USD0.20 means any upward movement is pure profit. But DCA lets you potentially profit even from smaller swings.


If EDC rebounds to USD0.10 during your DCA period, the EDC you bought at USD0.04 per EDC are already generating gains.


This way, you're actively managing your portfolio instead of passively hoping for a single big jump.


Remember:


Dollar-cost averaging (DCA)  isn't a guaranteed path to riches, but it can be a strategic approach to navigate market downturns and potentially improve your average cost and profit potential.


Consistency is key. Stick to your DCA plan, regardless of short-term price fluctuations.

Use only what you can afford to lose, and always do your own research before making any acquisition decisions.




Bonus Tip: 


Consider DCAing with a limit order to buy only when the price dips below a certain level, maximizing your buying power during downturns.


By using DCA strategically, EDCOINERs can turn a price dip into an opportunity to lower their average cost and potentially profit from future price swings. Remember, patience and consistency are key to making the most of your EDCOIN portfolio.


CAUTION!


The above is not financial advice. Please do your own research (DYOR). 


Always ensure that the digital assets you DCA into are for genuine ecosystems that are building utility and that the total issuance of digital assets are fixed and not infinite!


The EDCOIN FOUNDATION has been steadily BUIDLing the EDCOIN ecosystem and utility for EDC will increase and even more as the era of WEB3 is upon us! And yes, the total amount of EDC is fixed. There will ever only be 900,000,000 EDC!



I still don't understand what DCA is. Can you give me an example to help me better understand what DCA is?


Sure! Here are two examples!


1. GROCERY Example of Dollar Cost Averaging:


Imagine that you are buying groceries for a week. You could buy all of the groceries at once, on the day that you get paid. 



However, if the price of groceries goes up between the time that you get paid and the time that you eat all of the groceries, you will have less money to spend on other things.


A better strategy would be to buy groceries throughout the week, as you need them. This way, you will not have to spend all of your money at once, and you will be able to take advantage of lower prices if and when they become available.


Dollar-cost-averaging (DCA) is similar to buying groceries throughout the week. 


Instead of buying all of your EDCOIN at once, you can buy it over a period of time. This way, you can take advantage of lower prices if they become available, and you will not have to spend all of your money at once.


2. LEMONADE STAND Example of Dollar Cost Averaging:


Imagine you are investing in a lemonade stand.

 

The price of lemonade fluctuates throughout the day, depending on the weather and other factors.


If you try to buy lemonade at the lowest possible price and sell it at the highest possible price, you will have to spend a lot of time monitoring the market and making trades.

 

This can be stressful and time-consuming.


DCA is a better way to acquire lemonade.


You could buy USD10/week instead.


This way, you will buy lemonade at a variety of prices, and your average purchase price will be lower than if you had tried to time the market perfectly.


The same principle applies to acquiring digital assets.


DCA is a simple and effective way to reduce risk and stress, and increase your chances of long-term success.


You can extrapolate these layman's examples to EDCOIN (EDC), too.



Tell me more about DOLLAR-COST AVERAGING.



In general, Dollar-cost averaging (DCA) is relevant to all kinds of markets, from stock markets to other kinds of assets. DCA is an investment strategy in which an investor divides up the total amount to be invested across periodic purchases of a target asset. 

This strategy aims to reduce the impact of volatility on the overall purchase price by making purchases regardless of the asset's current price.



Investing in quality and genuine digital asset projects refers to investing in digital assets that have strong fundamentals and a team with a proven track record. 


These projects are more likely to succeed in the long term, even if the market is volatile in the short term.


Trying to time buying the bottom and selling at the high is a strategy that involves trying to buy an asset at the lowest possible price and selling it at the highest possible price. 

This strategy is very difficult to execute successfully, even for professional investors.


Benefits of DCA into quality and genuine digital asset projects:


  • Reduced risk: DCA can help to reduce the risk of buying an asset at a high price and then selling it at a low price. By spreading your investments over time, you are more likely to buy at a lower average price.
  • Less emotion: DCA can help to remove emotion from your investment decisions. By setting up a regular investment schedule, you don't have to worry about trying to time the market.
  • Simplicity: DCA is a simple and easy-to-follow investment strategy. It doesn't require any special knowledge or skills.


Benefits of DCA over trying to time buying the bottom and selling at the high:


  • More realistic: DCA is a more realistic investment strategy than trying to time the market. It is virtually impossible to consistently buy at the bottom and sell at the high.
  • Less stressful: DCA can help to reduce the stress of investing. You don't have to worry about trying to make perfect market timing decisions.
  • More likely to be successful: DCA is more likely to lead to long-term investment success than trying to time the market.



Conclusion:


Dollar-cost averaging (DCA) is a simple and effective strategy that can help you to reduce risk and increase your chances of long-term success, especially when acquiring quality and genuine digital asset projects.