Dollar Cost Average (DCA)
This order type allows you to acquire or divest from an asset at fixed rate intervals and pre-agreed transaction sizes.
The DCA order type is a strategy that transacts a set quantity of an asset and exchanges it for another at fixed time intervals. DCA order types are active until their funds are exhausted, or canceled, and until either scenario occurs they will purchase/sell a given asset with predetermined regularity and in fixed quantities.
These regular buy/sell orders at identical sizes eliminate variability by averaging out outliers. The more regularly the transactions happen, the more in line the executions will be with the average when taking into account the trading history of that particular asset during the period this order was active.
How it is used
Thomas wishes to increase his holdings of AXO tokens. As he is unsure about the future movement of the market he has decided that he simply wants to buy at the average long-term price - that way it doesn’t matter whether there are local tops or lows in the market. He sets aside $6,000, which will be used to buy AXO tokens in $500 intervals on the first day of every week. After a year has gone by, he bought near local minimum prices and also the local top prices, resulting in a lower average purchase price than if he had tried to time the market.
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