What is dollar-cost averaging (DCA)?

DCA means buying a fixed amount on a schedule instead of trying to time the market. How it works, when it helps, and its limits.

Dollar-cost averaging, or DCA, means investing the same amount at regular intervals, for example $10 every week, no matter what the price is doing.

Why people use it

• No need to time the market. Nobody reliably buys the bottom. DCA spreads your entry over many prices.
• You buy more when it's cheap. A fixed $10 gets you more coins when the price is low and fewer when it is high, which lowers your average cost in a volatile market.
• It builds a habit. Small, automatic buys are easier to stick to than one big decision.

A simple example

Say you put in $100 three times, at prices of $50, $25 and $50. You get 2, 4 and 2 coins: 8 coins for $300, an average price of $37.50, which is below the average of the three prices.

The limits

In a market that rises steadily, investing everything on day one usually ends up ahead, because more of your money is invested for longer. DCA reduces the risk of a bad entry point, not the risk of the asset itself. If a coin falls for years, regular buying does not save it.

Fees matter too. Many small purchases can cost more in fees than a few larger ones, so check what your exchange charges.