DCA stands for dollar Cost Averaging. It is a style of investment in which you invest a fixed amount into your preferred asset. It could be an asset of your choice
Every investment must be backed by proper research.
mostly all markets be it crypto, stock markets, commodities etc go through cycles of ups and downs.
While stocks and commodities markets have been around for a very long time so there is a lot of data available to analyze the markets.
However when it comes to crypto the market is very young and sees a lot of swings.
Besides due to the current hype in the crypto markets there are new projects that spring up all the time. This means one needs to do proper research about the project we want to invest in.
Safer to be with the big names
It may seem a conservative approach but it is safer to be with more established coins and tokens.
If we look at the more established coins like BTC, ETH putting money here is relatively safer. All one needs to do is study their charts and follow the buy and sell signals right?
This is easier said than done
The reason being that technical analysis is not everyone's cup of tea.
Besides there are a lot of factors like whale activity, Government regulations and the overall economic macro events and scenario that can make a smart investment look ugly very easily.
Remember people who BTC at the highs of the last bull season?
A lot of people put in their life savings, retirement funds, education money and even money set aside for treatment into BTC when it was touching $68000
The pain of value erosion is unthinkable for a person watching from the sidelines.
Lets talk about DCA with an example
Suppose you want to invest $100 into BTC every month.
So make this investment on a set day irrespective of the fact if the market is low or high.
Your investment should be driven by the long term opportunity.
DCA is not a short term opportunity.
In a bull market when the price is in an uptrend one may make a purchase and see the price going up by a few percentage points and it creates a positive feeling however if the market is in a down trend then an investors sees a lot of red and finds the money invested is getting eroded in value.
Using the DCA model one is making incremental buys and in this way if the market is in an uptrend you keep buying according to a set schedule and keep increasing the asset held in your portfolio.
Do remember that no up trend lasts forever neither does any down trend.
So when the market slides the investor continues to get a bigger amount of coins to stack away.
The DCA techniques cushions the risks associated with sudden rise and sudden fall of the market.
DCA is a long term strategy
If you are in the bear market it is the best time to accumulate.
However chances are there may be corrections and the price movement may be sideways.
So if you keep doing DCA over a period of time you would see the green growth in your portfolio.
Two important things to consider with DCA
One you need to have a long term vision and the patience to hold it.
Second you need to have the discipline to continue investing periodically as per your pre decided schedule
LPUD incorporates the discipline to survive the bear time and growing the portfolio.
LPUD or the Leo Power Up day gets you in the mood for investing.
I look at LPUD as a incentivized opportunity
First by way of buying leo tokens every month a user cements his position in a community he or she trusts.
By powering up the leo tokens a users can earn curation rewards.
As the leo power of a user grows so does the curation reward.
The opportunity to win a prize in LPUD is a great incentive
Every time a user powers up 50 plus or 150 Plus tokens he or she becomes eligible to win some mega leo power delegation prizes.
This becomes a great incentive to powerup and enjoy the rewards of DCA in terms of
- Curation rewards
- Increased value of holding
- Opportunity to win LPUD delegation awards
Final thoughts
With the current price of leo token being around $0.05 at the time of writing this post the entry level for the the LPUD is really low
One could power up with 50 leo and be eligible for the smaller LPUD prizes or power up with 150 or more leo tokens and be eligible for the bigger prize pool.
The higher your powered up value the faster would be the rate at which your leo portfolio grows.
Thus this is a great DCA technique to grow your leo stack while the price of the leo tokens is really quite low.
Also do vote for the Leo DHF proposal you can read the details here.
