Dollar cost-averaging (DCA) is one of the most popular investment strategies for newcomers who might lack the in-depth knowledge or time required to use advanced trading techniques. The premise of DCA is quite simple – by investing a portion of investment funds in predetermined time intervals, investors are protected from short-term market fluctuations while being able to grow their portfolios in a sustainable manner. In practice, DCA can help traders avoid impulsively buying at the top and nudge them to make investments when the markets are red, which often turns out to be the best time to buy.
While more advanced trading techniques can be more lucrative, they are more difficult to apply and can easily be misused, which can negatively affect portfolio performance in the long run. It is worth noting that DCA is considered a long-term investment approach that excels at longer time scales but offers little benefit at weekly and monthly time periods.
What is Binance’s Recurring Buy?
Binance’s Recurring Buy is a product that provides Binance users with an opportunity to put DCA to use in crypto. Traders can make scheduled purchases of various digital assets, including Bitcoin, Ethereum, and 40+ other cryptocurrencies, via Visa and Mastercard credit cards. This makes it easy for users to onboard their fiat funds to gain exposure to crypto and helps remove the ever-present doubt of when and how much to invest.
Binance Recurring Buy plans can be scheduled to automatically trigger on a weekly, bi-weekly or monthly basis. They can also be modified at any time, which allows users to change their plans’ parameters, including investment amount and the frequency of automated purchases. In addition, plans can be paused or canceled without users’ incurring any charges. For more information about the Recurring Buy feature, check this helpful article from Binance.
Why use Binance’s Recurring Buy as a DCA investment tool?
The automated aspect of the Recurring Buy product brings several benefits to cryptocurrency investors who might otherwise feel overwhelmed when making a purchase decision. Let’s take a look at some of the key advantages of Recurring Buy.
1. Risk reduction
Incorporating DCA to grow your portfolio via long-term appreciation reduces the risk of making rushed decisions and simplifies the process of purchasing crypto. Following a predetermined strategy, such as for instance buying €100 worth of Bitcoin every week, prevents traders from purchasing crypto at less than an ideal time.
2. Convenience and flexibility
Recurring buy can be tailored to each individual’s set of needs and goals. The minimum investment amount starts at just $15 and can go well beyond $10,000. The Recurring Buy plans can be easily managed and terminated, and provide a convenient way to purchase crypto that doesn’t involve advanced trading interfaces or market order types knowledge. Simply set how much money and how frequent you would like to buy your favorite crypto and Binance takes care of the rest.
3. Steady growth and savings considerations
Given Recurring Buy’s automated mechanics, the product can be used as a crypto-focused savings venue. Over time, even small amounts of funds invested here and there can result in considerable returns in the long term. For reference, putting $100 in Bitcoin per week over the last three years turned a total of $15,700 to $43,188, which is more than a 170% return on investment (ROI).
4. Exposure to the Binance ecosystem
Contrary to what many average investors believe, trading crypto is far from being the only way to generate profit on Binance. As your crypto portfolio continues to grow thanks to scheduled automatic purchases, you can start making use of other Binance’s features, including cryptocurrency staking, savings products, and others. This allows you to generate additional revenue streams with your crypto holdings that don’t put your portfolio at risk.
5. Take emotions out of the decision-making process
Being rational and calculated in your trading approach is key to making good decisions. However, achieving that emotional state is easier said than done, especially when your investment is doing poorly or you feel that you have missed a particular buying opportunity. Using DCA with Recurring Buy alleviates the stress by simplifying the investment strategy, rendering trading-related tilt and distress a non-factor.
How to use Binance’s Recurring Buy?
To set up your own Recurring Buy plan, head to the product’s homepage by clicking on the button below.
Step 1 – Select the cryptocurrency you would like to buy via Recurring Buy. Pick the local currency you would like to use and select the amount of fiat you want to commit. Finally, set your preferred buy frequency and select the date of first purchase. For the purposes of this guide, we’ve decided to invest €15 in Bitcoin on a weekly basis. Once you’ve decided on the properties of your plan, proceed to the next step by clicking on “Confirm”.
Step 2 – Choose a Visa or Mastercard payment method. You can add, or change the card from the menu. Once you’ve selected your payment method, click “Continue”.
Step 3 – If you haven’t used the credit card for making purchases on Binance before, you will be asked to provide additional verification information, including the CCV credit card number and your personal information. Click on “Confirm” after entering your card information.
Step 4 – You will be greeted by a summary of your Recurring Buy order. Click on “Confirm” to agree to the terms and conditions and start collecting crypto via automated fiat purchases.
As mentioned before, you can pause, modify, or cancel your active recurring purchases at any time. You can also have multiple concurrent plans active at the same time. For a more detailed guide to Binance’s Recurring Buy and an overview of management options, click here.
In addition to scheduled fiat-to-crypto purchases, Binance offers the Auto-Invest service, which allows users to use Binance USD (BUSD) and Tether (USDT) stablecoins to set up automated recurring buys of their favorite cryptocurrencies. Click here to learn more about Binance Auto-Invest.
Bottom line
DCA is one of the best and simplest trading strategies to accumulate wealth over time. By making small contributions in periodic intervals, investors protect themselves from making emotional and rushed decisions that can have an adverse effect on their portfolios. Using Binance’s Recurring Buy allows you to DCA your crypto investments and benefit from the long-term growth prospects the sector offers.
