 What is going on ladies and gentlemen welcome back to Bitcoin daily? It is I Bitcoin J back with you guys Yet again with another video For you guys today, so let's jump right into it man. Dollar cost averaging is what we're gonna be speaking about today We're gonna show you how You can use this strategy to have the best entry a lot of people are always asking, you know What's the best price to enter? Where to get where to get in? And a lot of people are always trying to either find the bottom or You know knife not trying to knife catch at the bottom But it's almost impossible to ever time the market in that way So sometimes time in the market is more important than timing the market if you get what I mean So right before we jump in don't forget guys. We're doing a giveaway So all you got to do is watch this video We're gonna have a question of the day in it once you get to get to the question of the day Just leave your answer in the comments below and then we will pick a winner the winner gets a $70 value of You know one month membership in our trade room $70 value It's amazing. You guys could get trades for free and you can make money off the trade So I mean it's a win-win Very easy to do Make sure to subscribe guys like this video and comment. All right, let's get right into it So what is dollar cost averaging also known as DCA? Dollar cost averaging is an investment strategy in which an investor divides up the total amount to be invested across Periodic purchases of a target asset in an effort to reduce the impact of volatility on the overall purchase The purchase occur the purchases occur regardless of the asset's price and at regular intervals In effect this strategy removes much of the detailed work of attempting to time the market in order to make purchases of Equities at the best prices Dollar cost averaging is also known as constant dollar plan. All right guys So the basic idea is here to just consistently Make deposits or purchases into whatever it is you're looking to invest into so for example A lot of the biggest question we get all the time is is you know for Bitcoin? Where can they enter and my answer is always you have to just end the best time to enter was when it first started in 2009 the next best time to enter is right now You just have to get in and then I also always recommend that you dollar cost average You don't just you know put one lump sum in all right Because that's in the end it's going to give you the best price possible All right understanding dollar cost averaging guys Dollar cost averaging is a tool an investor can use to build savings and wealth over a long period It's also a way for an investor to neutralize short-term of volatility, which is very very very Big in the cryptocurrency scene a perfect example of dollar cost averaging is its use in the four 401k plans not 491k Sorry about that for all 1k plans in which regular purchases are made regardless of the price of any given equity within the account In a 401k plan an employee can select a predetermined amount of their salary that they wish to invest in a menu of Mutual or index funds when an employee receives their pay the amount the employee has chosen to contribute to the 401k is invested in their investment choices, so If anyone of any of you guys have a job and I know most jobs offer this the 401k plans Which you basically just invest in and it's it's just happening over a long period of time You just continually continuously continue to invest Dollar cost averaging can be also be used outside of the 401k plans such as Bitcoin or index funds Fund accounts although it's one of the more basic techniques dollar cost averaging is still one of the best strategies for Beginning investors looking to trade. So like we said, man In in cryptocurrency is a lot of new traders a lot of new investors. So this is why we always recommend dollar cost averaging I Also recommend it with people trying to build up stock portfolios Dollar cost averaging is definitely the way to go when you're first starting out until you get into, you know more understanding of how it works and And then you can start making other moves, but the way to build up your portfolio is always the dollar cost averaging That that'll keep you from making really bad errors So here's an example of dollar cost averaging Joe works at an ABC Corp and has a 401k plan He receives a paycheck of a thousand dollars every two weeks Joe decides to allocate ten percent or a hundred dollars of Pay to his employer's plan. He chooses to contribute 50% of his allocation to large cap mutual funds and 50% to S&P 500 index fund every two weeks 10% or a hundred dollars of Joe pre-tax pay will buy $50 worth of each of these two fans regard Funds regardless of the funds price the table on the next slide is gonna show you The $100 contribution to the S&P 500 fund over 10 pay periods Throughout 10 paychecks Joe invested a total of $500 or $50 per week However, because the price of the fund increased and decreased over the several weeks Joe's average price came to $10 and 48 cents The average was higher than his initial purchase, but it was lower than the funds highest prices This allowed Joe to take advantage of the fluctuations of the market as an index fund increased and decreased in value All right, so here is the chart So that you guys can get you know for all you visual learners like me. I hate reading I always hate reading so I was always very very visual when it came to learning Here we go that the S&P 500 index the contribution shares bought shares owned and a total total value alright, so the first pay period the S&P was at $10 per share So $50 contribution bought him five shares You know $50 value very straightforward pay to Second pay period the S&P was up at $10 and 50 cents per share With the 50, you know contribution 4.76 shares bought So now he has 9.76 shares owned the total value is 102. So you see that the value went up Then his third pay period 10.75 per share He was able to buy a little bit less shares on now 14.41 total value 154 and as you can see he continued doing this whether it was up or down up down up down up down and At the end of it all he owned 47.71 shares worth $536.79 so his profit was $36.79 his investment was $500 All right So that's a very simple way to look at it and oh and his dollar cost average was 1048 Because of the up and downs of fluctuations in the market So it's important to note that this example of the dollar cost average strategy works out favorably Because the hypothetical results of the S&P 500 index Ultimately rolls over the period of time in question Dollar cost averages does improve the performance of an investment over time But only if the investment increases in price the strategy cannot protect investors against the risk of declining market prices the general idea of The strategy assumes that prices will eventually always rise Using the strategy on an individual stock without knowing about the company's detail could prove Dangerous because this strategy may encourage an investor to continue buying more stock at a time when they should simply exit the position For less informed investors the strategy is far less risky on index funds than on individual stocks Investors who use a dollar cost averaging strategy will generally lower their cost basis in an investment over time The lower cost spaces will lead to a less of a loss on the investment that decline in price and generate greater gain on Investments which increase in price All right So the way you can look at the S&P 500 index fund is similar to the way you'll look at Bitcoin You know Bitcoin is basically You know the biggest of them all in the crypto space And it's what everything follows the S&P 500 is Basically the same thing the S&P 500 is made up of the of the top 500 companies And you know the market basically follows the S&P 500 because it's the top 500 companies So however the S&P 500 does is how the rest of the market does as well on most case scenarios So let's talk about dollar cost averaging Bitcoin, let's go over some examples on that So what is dollar cost averaging Bitcoin? Bitcoin dollar cost averaging consists of investing a fixed amount of USD into BTC on the regular time intervals You'll often see it referenced it referenced by its abbreviation of DCA Purchasing $10 every week for example would be dollar cost averaging This strategy is mostly used by investors that are looking to purchase Bitcoin for the long term since it protects them from potentially allocating all their capital at a price peak Investing in Bitcoin with no DCA Example so in January 1st 2018 John decides to purchase $5,000 worth of Bitcoin The Bitcoin price at the time was $13,800 per coin, which means that John now owns 0.362 BTC now let's look at investing in Bitcoin using the dollar costing dollar cost averaging strategy January 1st 2018 Alice decides she wants to purchase the same amount $5,000 worth of Bitcoin However, instead of investing the entire amount today She decides to purchase $500 every month for 10 months 10 months later She owns 0.61 BTC that's almost twice as much as John even though they both Invested the same exact amount of money now you see why Dollar cost averaging can be very very good to average out your entry level Advanced Bitcoin DCA strategy if you have some experience trading you'll quickly realize that you can improve the performance of your dollar cost Averaging strategy by making use of some simple tools when going this route You would purchase Bitcoin whenever a set of simple technical analysis tools gives you a signal instead of a six of a fixed time interval Some examples of signals that traders can use for better timing entries include buying Bitcoin Buying when Bitcoin approaches a high time frame moving average like the 200 DMA Looking for unusually oversold conditions using which using the RSI or Matthew or it using Evaluation tool like the stock to flow model Let's go over some some Pros and cons of dollar cost averaging Bitcoin so dollar cost averaging is a powerful strategy for investors looking for long-term exposure to Bitcoin However, just like any strategy it has its pros and its cons This guy this guy outlines the pros and cons of dollar cost averaging into Bitcoin to give a balanced overview So again guys, there's no magic pill. There's no blanket strategy. There's no one way to invest There's no one way to always win and make money You're still it's still an investment. You're still risking money. It could still go in both directions So you have to be in it for the long term for to in order to use the strategy And it has to always be money that you're willing to lose So if you're risking that money, you have to be willing to lose that money Pros of dollar cost averaging Bitcoin it reduces the risk of buying tops dollar cost averaging is based on the concept of Splitting the desired investment amount into several smaller purchases made on a regular basis Okay, so so obviously, you know, you're buying Different amounts at different times So if the price goes down when you're buying it's okay because you can keep dollar cost averaging your price down And when it bounces back up over the long term, you're gonna you're gonna have a better entry than if you just bought For example at $15,000 and then you just been waiting for the market to go back to 15,000 And so you should have been buying, you know as it went down So it doesn't require a big up from investment since DCA strategies are constructed around making small yet regular purchases You won't have to commit a massive amount of capital from day one This is especially important benefit if you don't feel comfortable investing your savings into Bitcoin instead Take a small chunk from your paycheck every month I do this all the time guys not only with Bitcoin, but with the stock market in general I have it automatically set to Make deposits every single week. So every Monday my account is I make it deposit automatically. I don't it's not I don't have to think about it I don't forget sometimes, you know, it's automatic. I have it set to make a Deposit into Bitcoin and into the stock market now the amount it all varies depending on your Financial situation could be anywhere from ten dollars fifty dollars a hundred dollars a thousand dollars. That all depends on you Pick something comfortable. I usually recommend around ten percent to twenty percent of what you're Making on a monthly basis if you can't afford it And invest ten to twenty percent all together into your investment portfolio So you always want to try to try to be investing ten to twenty percent overall Monthly Number three gives you time to understand Bitcoin Everyone that held Bitcoin for more than three years is in profit on their initial purchase. However, many people kept capital late just Shortly after making their purchase these investors often do so because they did not take the time to properly understand Bitcoin and react Emotionally after a sharp BTC price decline in order to avoid making the same mistake It's crucial that you understand the value proposition of Bitcoin and that it should not Be seen as a get rich quick scheme. I know most people are in this to get rich quick This is not a get rich quick scene scheme So those that are in it for that get shaken out very very quickly and they usually have a bad time a Bitcoin DCA strategy helps with this by giving you some time to properly research BTC before your entire investment is Allocated of the result of this is that while you still know little about Bitcoin your allocated investment will also still be Small yet as you continue to learn more about Bitcoin Your your periodic purchases also kick in hence your investment amount in Bitcoin grows together with your knowledge about the currency That's so important guys the more time and you spend learning about it the more you you get comfortable with it and You know the better that investment you're making is gonna be long term For the opportunity to buy Bitcoin at a steep discount The benefit is someone is somewhat related to the first point we outline by not allocating all your capital at once You will have some cash left to step in if Bitcoin were to suddenly crash allowing you to scoop up some very cheap coins A great example is the November 2000 2018 Bitcoin price crash Bitcoin was trading for months in the in the 6,000 6k per coin range until it suddenly collapsed at 3.5 Buyers that had dry power powder left could use that as an opportunity to dollar cost average Needless to say shortly after the crash Bitcoin started a parabolic rally that would bring it to 14k per coin in just three months just think about that guys Another thing number five reduces emotional stress This is for those that get very emotional about this a highly underrated point in every every investment strategy Is the toll that it takes on your mental health This is especially true in the wild Bitcoin markets where price swings that would be considered Apocalyptic in the stock market are part of the norm by dollar cost averaging You won't have the stock the shock of investing a large sum of money and having to constantly worry about price swings Instead your investment amount will slowly increase as you get more comfortable with Bitcoin's inherent Volatility guys if you're in Bitcoin if you're in cryptocurrency period you have to accept the volatility You have to be okay with it because it is a very very volatile currency and And you just is something you have to embrace and deal with so No, no reason in being upset about it Or afraid just embrace it and learn how to make money in its volatility You use its volatility, you know in at your advantage use it as your edge Cons of dollar cost averaging Bitcoin now, of course anywhere where there's pros is gonna be cons It's nothing. That's just pros, you know, so cons it eliminates the possibility of buying exact bottoms While dollar cost averaging prevents you from allocating all your capital at the exact top Unfortunately, it does the same for the bottom if you follow a dollar cost averaging strategy It's impossible to allocate all your funds at the exact bottom in Bitcoin Some purchases will always be made at a higher price if the strategy was executed properly So this is this is what I tell people that are always trying to find the bottom of Bitcoin or any other Currency or investment you will never be able to time it if you do time it It's all luck. You got lucky. You're not, you know an oracle. You can't tell the future You're not a wizard. It's all luck So instead of depending on luck to try to time the market It's better to get in beats in the middle like so let's say over here Let me see over here is a bottom over here is a top, right? There's still all this space in between that you can use to make money. You don't have to catch either side You just have to catch what's in between So by getting in the middle and getting out in the middle You can still make your money and it's a lot more of a high probability to do so Number two it takes time to get desired exposure the very core of a DCA strategy Regular small purchases mean that it will take some time to get your desire your desired exposure Depending on how you structure your dollar cost averaging This usually means anywhere between three and 12 months All right, so obviously it takes time to build it your position And in the last one potentially lower performance and strong bull markets if Bitcoin is in a strong bull market Certainly the best move would be to make the entire purchase at once since the next time you would dollar cost average Price is likely higher. This is a major downside of the DCA approach However, on the other hand, how do you know for sure if Bitcoin is in a bull cycle? What if a price just showed some strength and retraces the entire rally by the end of the month which happens? Very frequently in Bitcoin. All right guys. Let's let's jump into Into some examples here. So so this is a site DCA BTC comm you guys can check out as well And test this your test this out yourself and mess around with the prices to see What number might work for you guys? So here's a an example. I use a Purchase amount of $100 a week for Accumulating over the period of three years starting three years ago. So we started three years ago buying $100 a week We would have invested total investment $15,700 but the the current value would be 27,557 So we would be up 75 point five two percent on our on our position and this is Basically, if you would have bought if you were to start a bind when Bitcoin Right after the Bitcoin hype, right? You see how this would have gone you would have gone up to $20,000 in value at one point that would have dropped all the way to $11,000 in value at one point a few months later. What is this? This so so let's let's look at the height right here 628 2019. All right. So imagine in June your account would have been worth $20,000, right? By this year March, so what six nine months later your account would have been worth 11,521 dollars. So it basically Your account would have been cut in half right But right now today your account will be worth 27,557 dollars 14 cents so you would have got made that right back and And you would have you would have been up and above and that's how the dollar cost strategy works Now once you get better at it, then you're able to for example here at 20,000 once you see it starts dropping You could cut that so for example This drop right here. You could have you know sold sat out maybe bought again here and Then once it started dropping sold again Then bought again down here and then at this point you you know, you would have probably You could have probably close to six figures at that point and That's that's a day trading strategy not dollar cost averaging So but that's way more advanced because yeah, even though your reward is higher So is your risk so you can you can easily lose all your money if you don't know what you're doing But yeah, you can you can use play with these numbers guys you can change them do whatever you want, you know ten dollars a Week a thousand dollars a week, you know You would have invested a thousand dollars a week for three years 157,000 total invested to it will be worth 275,000 right now. So and and if you would have done a hundred dollars a week for let's say Five years starting five years ago Look at that. Look at the difference guys. So if you would have invested twenty six thousand a hundred dollars Which is a hundred dollars a week for five years starting five years ago You would have twenty six thousand invested, but your profit will be two hundred and forty four thousand That's a eight hundred and thirty five percent point seventy five percent change guys the strategy works You just have to be patient. You just have to be consistent and That's that's that's about it guys If you have any other questions Actually, let's jump into the question of the day. I'm gonna just do it right here So a question of the day if you guys aren't familiar with it This is how it works every video. We will have a random question about something in the video The question will always be in a random area of the video find the question and find the answer in the video Post your answer in the comments for a chance to win a free month of membership to our trading room winners We'll be picked randomly once the video receives over 10 likes. You know what today For this video because we crushed this goal You know what only 20 I like 25. I like 25 better. So we're gonna go with 25 likes for this video Number would change as we grow we're growing guys so 25 likes. I know we could do it Good luck. So here we go. You guys ready question of the day If I Invested $100 per day for three years starting three years ago How much would my total value be today? We spoke about this guys So remember just get the answer. I need the exact answer the exact value drop it down in the comments below like the video subscribe to the channel and Share it if you want with your friends And you have a chance to win You know a free month in our trade group Appreciate you guys spending the time with me. I appreciate all the followers I appreciate everyone who's been subscribing and following and commenting and interacting with us Thank you guys for everything man till the next one. Peace