How to Buy Crypto with DCA (Dollar Cost Averaging) Strategy Using Binance Auto-Invest

Auto Investments or Auto-investing is one of the ways many traders use to meet up to the needs of the volatility in the Crypto market sphere.

The crypto trading space is a very volatile market and almost everyone trading crypto knows about the only strategy that works to give gains especially when the volatility becomes so crazy and not favourable to your crypto portfolio.

Don’t tell me you haven’t heard about Dollar Cost Averaging (DCA). Well if you haven’t; you are fortunate reading this article because we I am going to x-ray this strategy and show you how you can maximally use it to make steady gains in the crypto trading market.

This article will focus on Binance Auto-Invest which is a perfect tool to use when considering using the DCA strategy; although the Binance App also provides another useful tool for DCA; that is Reoccurring Buy-it has a similar concept when compared to Auto Invest.

This article will explain how to use Auto-Invest to DCA, but before we deep dive into that, let us consider some key definitions of Auto Invest, Reoccurring Buy, the difference between Auto Invest, Reoccurring Buy, and what is DCA. It will also x-ray DCA; using a case study to explain how using Auto-Invest and DCA can help you make more gains than an investor who chooses to wave along with the market volatility.

What is Binance Auto-Invest?

Binance Auto-Invest is an investment tool that allows Binancians or Binance users to set up an automated crypto investment whilst earning passive income. It works with the principle of the popular DCA (dollar-cost averaging) investment strategy. The Auto-Invest financial tool allows you to make a choice of the cryptocurrency you want to purchase and what reoccurring time frame you wish to opt. Once set, a regular purchase of the selected Crypto will be automatically deposited into your Flexible Savings account, and this means that you can earn passive income with your investments.

What is a Reoccurring Buy?

The Reoccurring Buy is another Binance investment tool that also works with the principle of DCA. It allows you accumulate crypto by regular purchase of a particular amount of a selected crypto from your credit or debit card. It is automated like a reoccurring bank transfer; but in this case crypto purchase.

What is the Difference between Auto-Invest and Reoccurring Buy?

Kindly note, that they are similar with a small difference. They both work as DCA tools. They allow an automated crypto purchases at regularly time-frame. However, there happens to be a small difference between them.

The difference is that Auto-Invest will automatically buy crypto from a stable coin found in your wallet or Flexible Savings account, and the resultant crypto purchased is also subscribed to Binance Earn (Flexible Savings account) so you can earn passive income while a Reoccurring Buy is an automated tool that buys a chosen crypto at a scheduled regular interval and at a specified investment amount to be charged directly from the Credit/Debit Card.

Simply put Auto-Invest automatically buys from your Spot or Earn wallet (Flexible Savings) while Reoccurring Buy automatically purchases from your Credit/Debit Card.

What is Dollar Cost Averaging (DCA)

DCA- an acronym for Dollar Cost Averaging is an investment strategy that functions on the principle of averaging the cost of purchases bought over a period of time so as to get a good entry or a good averaged price. Averaging cost can be achieved by investing a fixed dollar amount at a selected time frame; for example, a $10,000 investment each month could be split into $2,500 weekly. (So a particular amount and time-frame is set)

The basic effect DCA makes possible is being able to take advantage of the volatility in the market buying low quantity of an asset when the price is relatively high, and buying more of the same asset when the price goes lower with the same stipulated dollar amount.

This strategy helps the Crypto investor to acquire more units of an asset owing to the fact that the strategy obeys the ultimate Crypto rule to buy the dips. This practice in effect reduces investment risk exposure, balances market volatility effect, reduces the average cost of the assets when compared to amount per unit, it also averages entry price and ladders into positions.

To better explain how using Auto-Invest to DCA gives more gains than just a onetime investment purchase; let’s x-ray a case study using the $2,500 weekly scenario:

Assuming me and my friend Amos decides to invest in BTC. We both want to buy 1 BTC. Amos decides to buy 1 BTC at the current market price of $55,000, but I decide to use DCA strategy; so I buy $55,000 worth BUSD and subscribe to flexible savings on Binance Earn and go ahead to use Auto-Invest. I set Auto-Invest of $2500 BUSD/BTC buy weekly at the market price selecting the option to use my subscribed flexible $55,000 worth BUSD to buy BTC each week.

Here is the analytics of how much gain I will make more than my friend Amos when I have 1 BTC in my portfolio.

Take Away: Auto-Invest is a good investment tool to use when you wish to DCA; DCA is the best strategy to use in crypto investments especially in volatile markets regardless of price volatility in the market.

I was able to accumulate 1 BTC at $42,500 while my friend Amos spent $55,000 to buy 1 BTC at once which means that I made a gain of $12,500 from purchasing at a discount compared to my friend Amos’s onetime purchase. I will also record some accumulated interest from both the BUSD and BTC purchased subscribed to the Flexible Savings.

To summarise, I have earned passive income while buying BTC using DCA and bought my 1BTC at a huge discount of $12,500 compared to Amos who bought once and waved along the volatility.

If you are considering setting up an Auto-Invest schedule to buy your favorite crypto, here is the guide you need. To get started with creating your first Auto-Invest plan to DCA;

First you would need to create a verified Binance account by clicking here, and then complete the KYC process. If you already have a KYCed Binance account that you currently trade crypto with; simply go to https://www.binance.com/en/lending/auto-invest?ref=65177765 and follow these steps:

How to Create a New Auto-Invest plan?

  • Log into your Binance account
  • Go to the Earn homepage, Tap Auto-Invest
  • Choose or select a token or coin you want to buy
  • Next create a plan by selecting your preferred stable coin (USDT or BUSD) to use for purchases and enter the subscription amount (how much you want to buy)
  • Then enter the recurring cycle you wish to opt (daily, weekly, monthly or yearly as preferred)
  • Go ahead to select the option to complete scheduled purchases by using the money from Flexible Savings by redeeming your flexible savings assets if the balance of the stable coin in the Spot wallet is insufficient or leave out if you do not wish to use that option. If you do not select that option, note that scheduled buys will fail if the stable coin in spot is insufficient and will try to buy again at the next schedule.
  • Your Auto-Invest plan is ready and will start purchasing the selected amount of crypto at the scheduled cycle.

Once the Auto-Invest plan is setup, you can access the created Auto-Invest plan in your Earn Wallet and all crypto purchased can be accessed under History. You can choose to redeem your Auto-Invest purchased crypto anytime by:

  • Simply going to [Wallet];
  • Select [Earn];
  • Choose the Auto-Invest purchased crypto from the flexible Savings products and click [Redeem].

Note that there is no maximum limit to the number of Auto-Invest plans you can subscribe to and you can also edit, pause or even stop your Auto-Invest plans at any time you choose.

To Edit my Auto-Invest plans

  • Simply going to [Wallet];
  • Select [Earn];
  • Click [Auto Invest Plan]to view your plans,
  • Click [Edit] to adjust the frequency of the reoccurring cycle, or subscription amount etc.
  • Remember to save the edited settings and exit.

To Pause or Stop my Auto-Invest plans

  • Simply going to [Wallet];
  • Select [Earn];
  • Click [Auto Invest Plan]to view your plans,
  • Simply toggle the button under [On/ Off] to pause or resume a plan.
  • To permanently stop a plan, Simply click [Remove Plan]

Volatility will always exist in the crypto space and to succeed requires that you use proven strategies to trade and invest to make good gains. I have been using this Auto-Invest & DCA strategy with the best gains overtime and would recommend it to experienced traders.

Kindly consider making your own research as the opinions expressed via this article were gathered from my own personal research and it is not a financial advice.

For more personal researched articles on crypto investments and how to maximally use the Binance exchange; search through my archives here.

If you need more details or an answer to any question you may have about using Binance Auto-Invest; simply access the Binance blog page via: https://www.binance.com/en/blog/earn/how-to-accumulate-crypto-on-autopilot-with-autoinvest-on-binance-earn-421499824684903056

--

--

--

I am a crypto currency content creator and also a crypto trading training instructor. Feel free to reach me via email: kaycpompey@gmail.com.

Recommended from Medium

Introduction to OpenBazaar: A Decentralized Marketplace

The Economics of Social Money: Digital Communities in the Next Decade

Most Expensive NFT Ever

CoinEx Institute | Liquid Staking: Unleash the Assets Value and Efficiency of Public Chain Nodes

Eco DeFi opens voting for launching BABY token.

Token valuation and methodologies

Dad, What’s Crypto?

NFT Regulation Is Incredibly Complex… So You Might As Well Stop Misusing The Term

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Nwankpa Kelechi

Nwankpa Kelechi

I am a crypto currency content creator and also a crypto trading training instructor. Feel free to reach me via email: kaycpompey@gmail.com.

More from Medium

In 2022, I plan to make $1 million dollars with crypto

Understand Cryptocurrency for Novice Investors

cryptocurrency

Gas Fees are no laughing matter

3 Reasons Crypto Tokens Will Change The Way We Look At Trading Assets