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Show HN: Bitcoin investing using Dollar Cost Averaging strategy

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Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#81

Post by fiatjaf »

trophycase wrote: post #79
fiatjaf wrote: post #31

Some years ago everybody involved with the cryptocurrency universe had a relatively good understanding of economics, markets, agent incentives, game theory and so on -- even if these people didn't mention any of these terms, they seem to have a natural, logical, grasp of everything that was needed (not much). Now it seems that people come to cryptocurrencies without knowing a thing, misunderstanding the way people ac…

What's wrong with Tezos?

Nothing wrong, I just think it is silly. It's only feature is on-chain voting on protocol changes, something that wouldn't have prevented the Bitcoin hard-fork, for example. It also assumes hard forks are always bad and that everything can be agreed upon with votes, as if everybody were always satisfied with election results.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#82

Post by throwa_way_ »

pdog wrote: post #28

A better approach with an extremely volatile asset like Bitcoin is a simple tactical asset allocation strategy. For example, the following system significantly outperforms both buy-and-hold and dollar-cost averaging strategies. 1. Buy when the monthly price of Bitcoin is greater than its 10-month simple moving average (SMA). 2. Sell (and move to cash) when the monthly price is less than its 10-month SMA. That's it. M…

Nonsense snake oil.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#83

Post by test6554 »

Just buy Bitcoin Today and hold it for a year. Then hold it for another year. Buy it with money that you don't ever need again. Don't do so much that you feel like you woud be in trouble if you lost it all and don't do it with so little that doubling that money in a year would not be worth the rollercoaster that is bitcoin ownership.

The week after I bought mine, it dropped nearly 30% and now it's up nearly 90%. There was a series of emotions because I probably bought enough to be very very engaged but not enough to be in big trouble if it went south.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#84

Post by p4lindromica »

ericb wrote: post #65
ucaetano wrote: post #63

There is plenty of empirical evidence showing that DCA doesn't work, and only provide a psychological value. Why are people still using it? And for Bitcoin?

Sources?

The book A Random Walk Down Wall Street

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#85

Post by ucaetano »

ericb wrote: post #65
ucaetano wrote: post #63

There is plenty of empirical evidence showing that DCA doesn't work, and only provide a psychological value. Why are people still using it? And for Bitcoin?

Sources?

Besides all the actual sources that others provided, there's always the "proof by capitalism": if DCA made sense, institutional investors would use it and make more money.

They don't use it.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#86

Post by yamaneko »

brndnmtthws wrote: post #62
netinstructions wrote: post #23

The example says they want to invest $1000 over the course of 3 months, so 1000 / (3 * 30) = 1000 / 90 = ~11$ / day. But aren't the transaction fees (at least for Bitcoin) something like ~$2 per transaction? So you'd end up only investing ~$820 instead of the target of $1000 and losing the rest. Am I missing something?

Another problem with DCA is that it's a classic case of "timing the market". If, over the course of those 3 months, the value of the asset you're purchasing consistently increases, you'll 'lose' money in the sense that your dollar will have less and less purchasing power toward the end of the period. There's a good discussion of this strategy on the Bogleheads wiki: https://www.bogleheads.org/wiki/Dollar_cost_averagi…

Thank you, this is a great insight.

> A better rule, however, is: do not try to time the market. Just invest when you can.

I'm not sure if I understood this one correctly. Is it like, instead of trying to find the best time to invest, like waiting for something huge to happen, just invest every now and then when you are able to do it. Is that it?

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#87

Post by rb808 »

test6554 wrote: post #83

Just buy Bitcoin Today and hold it for a year. Then hold it for another year. Buy it with money that you don't ever need again. Don't do so much that you feel like you woud be in trouble if you lost it all and don't do it with so little that doubling that money in a year would not be worth the rollercoaster that is bitcoin ownership. The week after I bought mine, it dropped nearly 30% and now it's up nearly 90%. Ther…

Yeah that's a good sign that Bitcoin is not an investment its a lottery ticket, or more realistically an entry in a pyramid scheme.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#88

Post by bpicolo »

quantdev wrote: post #21
jstanley wrote: post #20

Earlier quoted context omitted.

Transaction fees (including the spread cost) on cryptocurrency exchanges are typically a percentage rather than a fixed amount. So it doesn't matter if you do $100 every week or $400 every four weeks.

Yes, you're correct -- my mistake. Bittrex's fees are 0.25% of each trade. My point about doing 30 trades every week manually is a lot still stands though. Maybe I'll try scripting this with Bittrex's API. It would be cool to have an option to scale each trade size by the current relative market cap, so you can have your own crypto index fund.

.15% I think it is? Or is that a different fee class

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#89

Post by asddddd »

nodesocket wrote: post #73
icelancer wrote: post #67

Earlier quoted context omitted.

Back then that was certainly true. Today it's easy and free to do using ETFs that are free to trade under certain brokers. Since I'm a boring fuddie duddie, I just rebalance my ETFs and index funds in Vanguard every so often at no cost, but I believe eTrade and some other platforms have a subset of "no commission" ETFs, Interactive Brokers has very low commissions, and if you like startups in the space, Robinhood is…

Robinhood is good for quick smaller trades, but their order fill is horrible. Every time I am shocked at the prices my orders fill at. I'm fairly positive they are making money front-running or from kickbacks from exchanges.

They sell flow to KCG/Citadel/etc like most all (every?) retail broker.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#90

Post by __s »

rb808 wrote: post #87
test6554 wrote: post #83

Just buy Bitcoin Today and hold it for a year. Then hold it for another year. Buy it with money that you don't ever need again. Don't do so much that you feel like you woud be in trouble if you lost it all and don't do it with so little that doubling that money in a year would not be worth the rollercoaster that is bitcoin ownership. The week after I bought mine, it dropped nearly 30% and now it's up nearly 90%. Ther…

Yeah that's a good sign that Bitcoin is not an investment its a lottery ticket, or more realistically an entry in a pyramid scheme.

How is Bitcoin a pyramid scheme as opposed to USD?
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