What is DCA?
Dollar cost averaging explained. How regular deposits smooth out price risk.
Key Takeaways
- DCA means investing a fixed amount on a regular schedule
- It removes the stress of trying to time the market
- With MaxFi, each DCA deposit starts earning fees right away
What DCA Means
DCA stands for Dollar Cost Averaging. It means investing the same amount on a regular schedule. Every week. Every month. No matter what the price is.
When prices are high, your money buys less. When prices are low, your money buys more. Over time, this averages out to a good entry price.
Why DCA Works
Nobody can time the market. Even professionals get it wrong.
DCA removes the timing problem. You do not need to guess if the price will go up or down tomorrow. You just invest on schedule.
This is powerful because:
- No stress: You do not watch prices waiting for the "perfect" time
- No regret: You never put all your money in at the top
- Discipline: A regular habit beats occasional big bets
Simple Example
You invest $100 per week into ETH for 4 weeks.
| Week | ETH Price | ETH Bought |
|---|---|---|
| 1 | $2,500 | 0.040 ETH |
| 2 | $2,000 | 0.050 ETH |
| 3 | $2,200 | 0.045 ETH |
| 4 | $2,800 | 0.036 ETH |
Total spent: $400. Total ETH: 0.171. Average price: $2,339.
Your average price is lower than 3 out of 4 weeks. That is the power of DCA. Buying more when cheap, less when expensive.
DCA + MaxFi
Standard DCA means buying and holding. With MaxFi, every dollar you invest starts earning fees immediately.
Your week-one deposit earns fees for 52 weeks. Week two earns for 51 weeks. Each deposit stacks on top of the last.
This means DCA with MaxFi builds a position and an income stream at the same time. More on this in the next lesson.
What You Learned
- DCA means investing a fixed amount on a regular schedule
- It removes the stress of trying to time the market
- With MaxFi, each DCA deposit starts earning fees right away