Crossposted from https://lemmy.ml/post/48918911

The irritating DCA thing is just a manipulation from bankers , stimulating the worst possible gamblers mistake - chasing losses. DCA claims it averages cost of participation, but that is a pure fallacy: these are independent events and probability of winning does not increasing with each “entry” even a cheaper one. What bankers are proposing to you is that you play again to cover previous losses. But the next play has the same probability to losing as the first one .

  • tracyspcy@lemmy.mlOPEnglish
    3·
    2 months ago

    It’s not technically the same as chasing losses because the bet doesn’t technically resolve until you try to sell your Bitcoin. Unless you’re selling your stake and only then deciding whether on not to buy more, the theoretical final value of your Bitcoin could be anything.

    you may consider it resolved at any time and stop it. Simplifying, same logic may apply to a casino, where you change money to chips, make bet, lose and consider it not resolved till you not exchanged chips back to money.

    In that sense, DCA does make some sense in the hypothetical final accounting. UYour payout is whatever price you sell at, and your buy-in is a weighted average of the prices you bought at. For something like a stock portfolio where you actually have reason to expect the overall value of your investment to grow over time (because the economy generally grows and your portfolio is spread across a broad swathe of it) the math does work.

    but we are not speaking about stocks here, we are speaking about bitcoin and there is nothing that backs idea that it will grow over time. If we are not expecting any positive long term outcome , dca is just a kind of martingale strategy.