Though cost averaging is intended to be simple, there are more advanced strategies you can use, once you become more comfortable with the process. These focus on adjusting the amount of your regular investment dependent on market conditions.
As already mentioned above, cost averaging doesn’t perform best during a rising market, but how do you know the market is overheating?
Another way to look at this is thinking about whether price is performing way above, or below a long term average. Technical indicators such as Relative Strength Index (RSI) are useful or you could look at the degree to which reliable models like Stock to Flow are moving above/below expectation.
Our section on how to trade cryptocurrency looks at moving averages and technical indicators in much more detail so head over there to understand what is involved. If you are just getting started with DCA wait until you have gained enough of an understanding of the process before adjusting your regular purchase level.
In the next guide, we’ll look at how to earn cryptocurrency, and increase the size of your holdings.
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