Dollar-Cost Averaging

Dollar-cost averaging is the mechanical practice of buying a fixed amount of an asset at regular intervals rather than committing the whole sum at once. Because a fixed budget buys more units when the price is low and fewer when it is high, the average entry price ends up below the average of the observed prices, which is the arithmetic property the method is named for. It is a rule for removing timing decisions, not a protection against loss: if an asset trends down over the whole schedule, every purchase adds to the loss. In crypto the approach also carries operational cost, since each buy incurs a fee and, if withdrawn on-chain, a network fee too.