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What Is DCA Strategy and How to Use It on Binance?




Dollar-cost averaging, or DCA, is an investment strategy that reduces risk by spreading your investment over several smaller purchases. We can easily use it on the Binance exchange, thanks to its recurring buy feature. In today’s article, we will explain exactly what the DCA strategy is and how to apply it to the Changpeng Zhao exchange. So, here we go!

What is DCA?

When investing or purchasing a significant quantity of an asset, dollar-cost averaging is a method that seeks to reduce the impact of volatility.

DCA is a strategy in which an investment is divided into smaller sums rather than making a single purchase of an asset. These are invested individually at specified times until all of the cash has been spent.

Cryptocurrencies are highly volatile assets and therefore also risky. The DCA strategy minimizes the risk of fluctuation, aiming to lower the average cost of investment.

What is Binance’s Recurring Buy?

Binance announced the recurring buy feature in September 2021. At the time, the exchange stated that the new service “allows users to easily purchase a set amount of cryptocurrencies at set intervals.”

Binance users can specify the assets they want to buy, the amount they are willing to spend and the frequency at which they want to invest. For example, you can set the purchase of a Binance Coin (BNB) worth 100 USD every Sunday morning for an indefinite period.

This service is available on both the Binance mobile app and the browser version of the exchange. Later in this article, we will explain to you how to set up automatic cryptocurrency purchases on Binance. We will focus on the browser version, but the setup process is similar across all interfaces.

For now, users can only make recurring purchases with Visa and Mastercard credit or debit cards. When the feature was announced, there was also no mention of plans to expand payment methods in the future.

Why use Recurring Buy to DCA?

Binance’s recurring purchase features and automatic cryptocurrency purchases, in general, carry a variety of benefits. These include:

  • Simplicity – There are two methods to invest in cryptocurrency: manually or automatically. The first method is the most prevalent, and it entails going into your Binance account in order to place a buy order. The second step simply requires configuring the purchasing rules and allowing the platform to carry them out.
  • Dollar-cost averaging (DCA) – DCA is a typical trading method in which a trader buys an asset in several trades as its price varies. This allows him to lower the total cost of his investment, regularly grow his portfolio, and mitigate risk.
  • Security and reputation – Binance is a major exchange with an exceptional reputation for reliability and security. Its safety is attested to by the large number of delighted consumers.
  • Flexibility – Binance’s recurrent buying option allows customers to make daily, weekly, bi-weekly, or monthly cryptocurrency purchases. Hundreds of different cryptocurrencies and tokens may be bought using Binance. This allows an investor to develop their funds in a systematic manner.
  • Support for Visa and MasterCard – these two payment processing firms are the most widely used debit and credit card providers, making the service available to the vast majority of individuals all over the world.
  • Usability – Binance is the largest and most popular cryptocurrency exchange in the world. Apart from recurring buy, an investor may use other products in its ecosystem. This is for example staking, yield farming, Binance Launchpad etc.
How to sign up for Binance Recurring Buy?

Making recurring purchases on Binance is trivially easy. It all basically comes down to following a few simple steps. Here they are:

  1. Go to your Binance account and log in. If you haven’t registered yet, click this link and follow the instructions.
  2. Hover over “Buy Crypto” located on the top bar and then click “Credit/Debit Card”. Alternatively, you can also just click on this link.
  3. Now click “Recurring Buy”
  4. Choose the fiat currency, the cryptocurrency you want to buy, its quantity and the period according to your preference. Then click “Continue”.
  5. Select the card you want to use and click “Continue” again
  6. At this point, your order details will appear. If everything is correct, click “Confirm”.
  7. Binance will display a confirmation message and that’s it! You have just set up your first recurring plan. From now on Binance will regularlly invest in the asset of your choice for you.

If you would like to edit or cancel your plan, you can do so by going to “Orders” -> “Buy Crypto History”. Then select “Recurring Buy”, “View Plan” and “Manage”.

The post What Is DCA Strategy and How to Use It on Binance? appeared first on The Merkle News.

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