DCA Trading

This video tutorial explains to you what dollar cost averaging is, or DCA trading. I use a combination of dollar cost averaging or DCA trading together with hedge trading. But we first have to understand what DCA is and what it means in the marketplace. So this is how Google defines it. So dollar cost averaging is a strategy to manage price risk instead of purchasing shares or whatever you're purchasing at a single price point with dollar cost averaging, and you buy in smaller amounts at regular intervals, regardless of the price. So basically what we're saying is here is that we're buying in to whatever you're purchasing, whatever commodity or indices or currency you're buying in at different price points. Okay? So we're not trying to time the market, where to find the bottom or where to find the top to to sell. So where to buy. What is the bottom when you want to go long and what is the top if you want to go short? That's not how we trade. Okay, so let me explain to you how the institutions trade. So or how a institution will want you to invest with them. So you have a regular investment, or you're thinking of investing in a regular investment, you speak to your financial advisor and your financial advisor says to you that you need to invest every single month via a debit order. And we will then take that money and invest it for you every single month. So let's go and have a look at the market and what that means for you in the marketplace. Right? So if we look at my phone, let's take a screenshot of the phone so that we can better understand what I talking about. Right? So let's say you invest your money with an institution and the institution says to you that you need to invest. This is month one over there, this red candle over here. I'm going to make it smaller so that we can.

Just understand it better. So that's month one. You invest in whatever you. You. He invests the money for you, okay? He or she invest the money for you, okay? Then in month two, you invest again, okay? Month two is over there. This is month three. This is month four. This is month five. This is month six, and this is month seven. So you invest for seven months. And over the seven months, you can see all your money, okay, is worth less and less. Okay? Nobody's timed the market, nobody's looking for, okay? Lowest price. This is how an institution will invest for you. Then in month eight, they invest for you. And then month after month eight, the price increases. All right? So the money that you invested in month 5, 6, 7 and 8 are now in profit. Maybe 5, not so much, 5 is broken. Even your investment that you invested in month six, this, this money here, the price went down. And then month seven, the price went down. So your money from seven, from six and seven is now in profit. Then you invest again over here. That's month 10. So now your month four and five are in profit. Okay? And then you invest over here, and then you invest again over there. And then you invest again over here. So now you've invested 13 times over a 13 month period. And as you can see, your. The, the money that you invested over a 13 month period is now overall in profit. Okay? So it's an average. Overall, you're in profit. Okay? So a financial institution doesn't look for the bottom of the market and doesn't look for the top of the market. All right? So that's basically what dollar cost averaging is. Let me show you what I do manually. All right? So I place trades according to my Strategy using the second candle that opens above or below the 8 exponential moving average. All right? So if the price goes up, I invest, I go long. Okay? If the second candle opens above the 8 exponential moving average, I go long. All right, so now there is a, there is a fractal on 1932. As you can see here, it's a lovely buying opportunity. So I'm going to place a little buy stop for 0.1 lots. Okay? And I'm going to place it at 1932. Alrighty. So now I'm dollar cost averaging in the marketplace. So my order is now set to trigger when the price goes up and the price goes past 1932, my trade will execute as a buy. All right? Now let's say, for example, the price goes down. So I've got a buy over here.

I've got a buy over here, and I've got a buy over there. This is my buy. All right, now let's say the price goes against me and the price goes down. It gets to there. And then let's get another type of. Let's get the 8 exponential moving indicator over. Or rather, yeah, the 8 exponential moving indicator. Let's draw some lines. All right, and then let's say we get a green candle. Let's say we get a green candle and the price reverses. So we get a candle that opens above the 8 and another candle that opens. There's this. There it is. The second candle has opened above the eight. All right, So I then place another buy trade. So we're Going to place another buy trade. Let's place a buy trade over there. That's where we will place a buy trade a little bit below. Okay, let's say we miss it. Okay, let's say we miss it and we only place it there. So on or above or in the middle of the candle. But we placed it within the the second candle opening above the 8 exponential moving average. Now I've got three trades that are bars. Now let's say, for example, the price tanks again. All right, the price goes down. I'm going to use smaller candles. The price goes down. So we got candle reverses. Then we got one candle and then two candles. This we need to change the color back to the 8 exponential moving average. There we go. All right, and we now going to move the 8 exponential moving average a little bit. Okay, so there we go. The second candle now has opened above the 8 below the 8 exponential moving average. And then again the price then reverses. So I'm going to move this down a bit. Move this down, move this up like that. A new green candle opens above the 8 exponential moving average. And we go north. And then I place another buy trade when the second candle opens above the 8 exponential moving average. All right, so yes, I've got sell trades as well, but let's just talk about the buy trades. All right, so now I've got a buy trade here, a buy trade here, a buy trade there, and I've got a buy trade here. So, so I've got four bar trades. So let me just indicate I've got a buy trade over there, three. And I've got a buy trade here. Four. Right. So I've got four buy trades. So now let's say there's an announcement and we get a big green candle, big green candle. Price goes north and it stops over there. Now what's happened to my buy trades? I've got one, two, three buy trades that are in profit it. Now overall, these three profitable trades will supersede this trade over here, the loss of this trade. All right, now if for example, the price goes down again, let me just paint this quickly black. Now let's say we've got the 8 exponential moving average. And then let's say this candle here goes a little bit higher. And then all of a sudden we've got a red, a big red candle. Candle red one, candle two. So what happens? The second candle opens below the eight exponential moving average. What will I do? I will close out all my buy trades that are in profit. All right, you can Close out this trade as well. It's up to you. If you feel that it's at a very high price, like let's say for gold, it's at 1980, the chances of getting back to 1980 at or low, then I think I would close out this trade as well. Overall, I've made a profit in my sequence. Okay. And then I will, I will place a short trade when the second candle opens below the 8 exponential moving average. Now over here, where the second candle opened below the 8 exponential moving average, I would place a short trade. Okay. But I also, before I place the short trade, I need to look at the sentiment to see what the sentiment is. If the sentiment is, okay, 95 or 85% short, I don't think I'm going to place a short trade because the chances of the price going north is very, very positive. Okay? So you can't be placing trades right at the top of the of the trend for a buy and you can't be placing cells right at the bottom of the of the trend. Go for a, for a short because you may get stuck in that, in that position, you can$cost your way out of it using this strategy. But there's no point in doing that. I'd rather wait for better opportunities. So I hope that this, that this better under gives you a better understanding of how dollar cost averaging works and how you can use it to your advantage. So I hope that you found this video informative. If you didn't understand, just rewind the video if you listen to it again and then I'll see you on my next video. But before you go, please give me a thumbs up and a like because it helps the algorithm, the YouTube algorithm, send the right videos your way. So please subscribe to my channel like and comment on the video so that you get the right videos. And you also, you're also alerted when I bring out new videos and I'll see you on my next video.