You've probably heard some crypto-chatter: "dude, just DCA and forget it".

In with the 'smash-buy' and 'buy the dip' culture that comes with crypto, you may hear people talking about DCA'ing into their favorite coin, but because we're all just a tad bit on the... psycho side of the spectrum, maybe you were afraid to ask what that means. I'll break down the rather simple concept with some less-than-simple factoids, and add a secret strategy that Gordon holds dear... because I'm such a swell guy.

DCA means dollar cost averaging. That's for the people who didn't read the title.

Dollar Cost Averaging is a form of... y'know, averaging! But, what are you averaging exactly?

Here's the deal

We all know the pump and dump, and we know cryptocurrency is notoriously volatile and controversial, so of course our friendly neighborhood legislators want to put all of those fed funds into studying stablecoins- lol. Yeah, more to come.

We all know there's a lot of shill news, we've mostly all heard 'buy the rumor, sell the news' enough times to guess not all things are as they should be, but the idea of dollar cost averaging is to minimize risk and give a person a good opportunity to gain a fair market price for their investments over time.

You may scratch your head when some giant whales of the market smash buy on Bitcoin near the top and don't seem to mind a single bit. At a given month, the likes of Michael Saylor might be up by $50M or down by $80M in the value of their Bitcoin holdings compared to what they paid. The answer to the lack of concern, is that people who focus on investing at each opportunity like this are focused on the long term. A short term horizon of vision will cause people to freak out that they overpaid on their chosen asset.

So, first above all things, choose your investments wisely. The old adage about spreading things across several different categories and 'don't put yer aygs in one basket' may not necessarily be the winning strategy in crypto. Consider this the disclaimer that comes before me not giving you financial advice.

So, let's say you DO have confidence in your coins of choice, and now you want a plan for getting some... a lot in fact.

Dollar cost averaging is a way to create a steady schedule for investing into your choice of crypto steadily over time. You might, for instance, decide you want to buy a little coin every time your paycheck comes in. You may simply say every "x" day I'm going to buy "y" of crypto. You could choose to program a DCA calendar and value in your exchange program, set it and forget it. DCA is not a single, hard-pressed rule, but it is the idea of following a discipline: set a plan and stick to it.

Here's the kinda cool thing about DCA'ing-

The averaging part is one of those amazing things about math that almost defy logic, and in fact it actually DEFINES logic- quite literally.

If you were to buy Bitcoin every Thursday at 8 PM, for instance, even if it happened to be the FOMO new all time high of the century, over time your average price will end up coming closer and closer to its lifetime average. There's something odd and random about this, because we think we understand how a market can potentially fluctuate, but DCA really proves to us that when you have an asset of any kind, if your goal is to simply acquire it regularly, you can do so without paying much, if any, attention to the price.

Sure, while we sit in the low $40K Bitcoin range, it's hard to feel good about the idea of buying it right around $67K, and if you weren't DCA'ing there's a very good chance according to the Murphy Laws of Crypto, that you bought historically at $20K, 13K, 20K, 65K and 68K, because human nature makes it incredibly easy to FOMO right up to the top and not even notice it happened.

Likewise, there are very few people in trading as opposed to HODLing, who ever actually caught the bottom of the dip without also catching several positions far too high on the way down. Did I mention, it's important to have confidence in your investment? That's why.

DCA takes advantage of some very cool math, where no matter how dull or how radically volatile your investment, if you invest in some regular interval, at a regular value, you will get a fair average price over the long term no matter what crazy prices you may have purchased at along the way.

So, here's something I've devised of my own trading strategies, and I tend to be a bit of a sharp-shooter at market, so bear with me.

I have designed a system that I call "Smart-DCA" and that may be something 'out there' on the internet- I dunno, I don't really care.

Gordon lives inside his own mind, so whatever anyone else wishes to do- that's Coolio.

With Smart DCA, you set a horizon for your DCA plan, and then adjust it ever so slightly towards the market. It is important to think in terms of the long term average. You don't want to simply start taking your funds and guessing on the market; trust me, math will find you out and mock you. For a Smart DCA plan as I've designed it, I have the typical cryptonian in mind, because people are enthusiastic about the space. Most people in crypto take at least a minimal interest in their favorite projects and aren't simply wanting to be completely hands off. There's a culture surrounding all of this. We like to be involved, though some are more fanatical than others. 

So, I assume that the SMART DCA planner will have a strategy and a game plan and they are willing to be diligent and stick to it. The "smart" part is to only adjust the day or time, by micro moves in the market, and to only adjust the amount invested by the same.

This is best served with an example.

Let's say you have a DCA plan, regular vanilla DCA, to invest in Doge... no to invest in Litecoin 52 times/year. Once, every week on a Tuesday, you buy $100 of LTC. You will very possibly get it somewhere between $90 and $300 in 2022- maybe I'm right, maybe not.

In a smart DCA, every week you have $100 to buy some LTC.

Every week you have 1 purchase you will make.

If you like watching the market, you may be watching a 1-3 day trend of it going up or down, or you may have been watching every few days and noticed a 1-3 week trend up or down. You can choose to wait until you think things are at a lower point for that week and DCA at an adjusted time. If things are dropping to an extreme, you may wait for a week and invest $200 at the bottom. Similarly, you can choose to "scale" your Smart DCA, meaning you may take the premise of $5200/year in 52 week increments, with the plan that you will buy more heavily at the bottom, while spending smaller amounts less often at the top, and there are many variations in between. Keep in mind that the math mocks you- if you get too creative or too flexible, you will eventually out-guess yourself, and eventually you are better off simply DCA'ing if the market keeps going up and you find you are simply missing the opportunity to buy at average price as it spends weeks going up. So, SMART DCA takes a lot more discipline than a regular set-it-and-forget-it.

Smart DCA ala Gordon will work best for someone who truly understands the market and watches it regularly. If you have the funds to invest heavier on the way down than a standard DCA, and to invest more often on the way down as well, you will do better than the average price, and the same goal at hand, you will end up with more of the underlying asset than a simple DCA. Both options are a smart way to get a good value over time, and that is a good thing!

And on that note, Crypto Gordon Freeman... for now... out.