What is Dollar-Cost Averaging?
Dollar-Cost Averaging (DCA) is an investment strategy where regular, recurring purchases are made into an asset for a consistent dollar amount, rather than lump-sum purchasing. This allows you to average our your purchase price, and avoid the price spikes and dips. While you can manually do your own DCA purchases, the easiest way to DCA is with platforms that allow automatic purchases at your own custom intervals - like the 1Bitcoin.ca Auto-Buy service.
How do I set an Auto-Buy on 1Bitcoin.ca?
Setting up a Auto-Buy on 1Bitcoin is incredibly easy! Make sure you have some CAD on your account. If you don't you can easily load Canadian Dollars by following this guide.
Select "Auto-Buy" on your 1Bitcoin dashboard sidebar, or click "Create an Auto-Buy" during the normal Bitcoin purchasing process.
Customize your Auto-Buy. Here you'll be able to input the dollar amount you wish each Auto-Buy to be, as well as set a custom interval that you with the purchases to execute on. Some examples you can choose:
Daily, at 12pm
Weekly, every Saturday and Sunday, at 5pm
Monthly, Every second and fourth Friday, at 2pm
Once you've chosen your selected interval, click "continue", and you will be brought to a confirmation page that will outline the details of your Auto-Buy. If everything looks good to you, click "confirm", and you're all set! Your purchases will automatically execute and be deducted from your CAD balance on the intervals that you have chosen.
You'll be notified of all purchases that occur, as well as reminded if your balance gets too low. You can view the details of your active Auto-Buy, make changes, or cancel, by clicking on the same "Auto-Buy" prompt on your dashboard sidebar, or by clicking on your "Active Auto-Buy" tile on your 1Bitcoin dashboard.
Benefits of Dollar-Cost Averaging
Avoiding Price Volatility
By purchasing Bitcoin on a consistent basis over a long period of time, you are able to make your cost of acquisition of your Bitcoin equal out to the average price of Bitcoin over the period of your DCA. This allows short-term price spikes and dips to not affect your acquisition price as drastically, and allows you to buy Bitcoin at a much more predictable and stable price over time.
Reducing Stress
Stop worrying about trying to time the market! Using an automatic DCA allows you to forget about trying to buy on a dip, or trying to avoid a price spike. Focus on other things in your life and just keep stacking those satoshis!
Consistent Budgeting
By setting up a DCA, you can add Bitcoin to your budget and plan ahead for each purchase! Whether you are buying in $50 per week, or $500 per month, Dollar-Cost Averaging allows you to create a predictable and easy way to manage your buy-in.