DCA Strategy Explained: Average Buy Price, Break-Even & Examples
Learn DCA (Dollar-Cost Averaging) step-by-step. Calculate average buy price, break-even, ROI, and see practical examples (crypto & stocks) with common mistakes.
DCA smooths entry timing by investing fixed amounts over time. Done right, it reduces timing risk and keeps decisions systematic.
What DCA does (and doesn’t)
- It reduces the risk of a single bad entry.
- It makes investing process-driven.
- It does not guarantee profit or fix weak assets.
Average buy price (cost basis)
Average buy price is the weighted average across all buys: Average price = Total cost / Total units
Use:
Break-even matters more than average price
Break-even includes entry and exit costs. Most people forget exit costs and overestimate profit.
Use:
DCA rules that actually help
- Fixed schedule and fixed amount
- Max allocation per asset
- Include fees and slippage assumptions
- Review quarterly, not daily