Almost Everyone Makes These 5 DCA Mistakes | Dollar-Cost Averaging

I’m sure most of you are aware of the dollar cost averaging investment strategy by now, and you’re probably using it right now. However, no strategy is perfect because every strategy has flaws. And, whether you realize it or not, you may be making some of the most common mistakes while DCA. So, in this article, I’ll show you five blunders to avoid when using this DCA strategy.So, without further ado, let’s get right into it.

1. Allowing one’s emotions to take control

letting emotions control youThe first and most common DCA mistake is obviously not practicing it consistently and allowing emotions to take over. That is completely understandable given that we are constantly bombarded with news from all over the internet.

Keep in mind that the goal of the media is to make every problem your problem. They are incentivized, or should I say it is built into their business model, to make you feel relatable and consume their content. Because if there is no attention, there will be no viewership, which means less revenue for them, whether from advertisements, sponsored content, or otherwise. So, even if you are so confident in this one crypto, when its price falls by five, ten, or fifteen percent, you are subconsciously taking into account all of the news or things you read on social media, in the news, and so on, and this could eventually prevent you from placing that DCA trade consistently.

Don’t get me wrong: it’s completely normal to second-guess our decisions, and we do it all the time. Even if I don’t like it, whether it’s choosing what food to eat, how we talk to people, or making large purchases, we are subconsciously processing all of the information we consume from the internet. Because emotions are a part of our DNA, there is no single simple strategy for eliminating them. But what you can do to counteract that fear factor is to have true conviction and a deeper understanding of your investments.

Do you have any basis for counterarguments if people challenge your investment? Do you, for example, have facts on numbers or quarterly performance updates to back yourself up in Cardano? Do you really understand the industry landscape and how it relates to today and the future? I hope this has given you some food for thought.

2. Completely ignoring macroeconomics

completely ignoring macroeconomics cryptoThe following DCA mistake is being too hands-off and completely ignoring macroeconomics because it is easy to assume that your investments are great. The crypto market as a whole will trend upwards in the long run, especially if you just look at the few big names over the next 5 to 10 years. However, there will consider major risks, commercial risks, and political risks when making an investment in cryptocurrency.

Commercial risk encompasses everything you know about the industry, from the total and serviceable addressable market to the key players, the coins business model, growth and operational metrics, and so on.

Basically, the numbers and business model can be tracked via websites such as Messari and glassnode. They usually provide a really good overview on those, so we’ll just take it from there and incorporate it into our due diligence so that you’re up to date on how the cryptocurrency or even the industry is evolving over time.

Political risks, on the other hand, are risk factors that arise as a result of political changes or instability in a country. And they are frequently overlooked because they are much more difficult to quantify. There is also a glass ceiling in that classified information is not easily accessible to commoners like us. And, to some extent, whichever stance you take, whether from the ruling or opposing party, there will always be debate, and both sides may be correct or incorrect.

3. Not rebalancing portfolio

not rebalancing crypto portfolioThe third common mistake that many people make with DCA is not rebalancing their portfolio on a regular basis because it is simple to invest consistently. However, evaluating your portfolio allocation on a regular basis is a completely different challenge in and of itself.

This may appear to contradict my first point about not allowing your emotions to control your investments.  For what it’s worth, if you’re investing in just bitcoin and ethereum disregard what I just said. However, if you are investing in altcoins, you must make an effort to rebalance your portfolio on a regular basis and not just DCA into them.

4. Failing to maintain a healthy cash buffer.

healthy cash buffer crypto

The fourth common is failing to maintain a healthy cash buffer. With today’s social media, it’s easy to get caught up in the herd mentality that cash is garbage and that you shouldn’t own any of it.

To some extent, this is correct. But don’t forget that if you don’t have enough cash buffer during a bear market or recession, you’re also losing out on opportunity costs because you don’t have enough bullets to buy the dips or even the bottoms.

This is related to my previous point about rebalancing your portfolio on a regular basis, because if you are always holding 10, 20, or 30 altcoins, you will have difficulty dollar cost averaging into all of them. And don’t forget that the goal of DCA is to minimize risk while maximizing investment gains. The last thing you want to do is DCA all the way to the peak and then run out of bullets to buy the dips.

Personally, I prefer around 10%. Set the cash buffer in the brokerage account, ready to buy at any time, and I won’t bother putting it in money market funds or fixed deposits because dips can come and go in a matter of days, and by the time your cash settles in your brokerage account, the dip will have passed. Right. Especially for those of us who do not live in the United States.

5. Ignoring Broker fees

wait-theres-a-broker-feeThe final and most optimistic move you can make with DCA is to disregard the brokerage fee charged for each transaction. When I buy something, I try to keep my brokerage fee to no more than 0.1 percent of the purchase price. You can, for example, refer to this simple Excel table that you can recreate.

If my brokerage fee is $0.35 per trade, I must purchase at least 350 USD in stocks or ETFs for each trade. Feel free to change the brokerage fee percentage to whatever value you are comfortable with in order to achieve the 0.1 percent fee.

However, as a starting point, 0.1 percent is a good place to start. We also keep in mind that this is just a brokerage fee. They are still clearing fees and regulatory fees such as the FINRA and SEC fees, albeit in much smaller amounts. Just so you know, I highly recommend you if you want to invest in the international market at the lowest possible cost with the most flexible and reputable broker available.


DCA is a useful tool to help you get started in your investing journey, but it should not be taken for granted because you must still use common sense and put in equal effort because the stock market is dynamic. Things may change, especially in this fast-paced economy, which may present good buying opportunities in and of itself. There are times when you should be more opportunistic, such as during a bear market or recession.

There are also times when you should be more conservative. For example, you will never know what is going to happen in the days leading up to a war or a global crisis. However, for the most part, DCA is your best friend when it comes to minimizing risk while maximizing investment gains. Remember, if you DCA too low, it can go even lower. Always have a reason for why you invested in the cryptocurrency in the first place. No strategy can save you from a shitcoin.

This article should be useful to you. And if you did, please leave a comment If you’d like to see more content like this, let me know. Thank you very much for taking the time to read. Stay safe. Continue to be a crypto investor. And I’ll see you in the next one.

DCA Trading Blog