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Dollar cost averaging can be an effective tool of setting up buy orders as low as possible. This will be more useful in a bear market but you will see why in the end.
DCA is a math equation...…
In words DCA is (Price of BTC at first purchase x quantity of BTC at first purchase) + (Price of BTC at second purchase x quantity of BTC at second purchase) / Total number of BTC purchased = New dollar cost average price.
This is where BEDMAS (BRACKETS, EXPONENTS, DIVIDE, MULTIPLY, ADD, SUBTRACT) makes a come back from grade school.
Follow along as shown....
($1000 x 2) + ($900 x 2) / 4 = DCA
2 purchases of 2 Bitcoin at $1000 and $900 for a total of 4 Bitcoin. This could be once every week, month, however frequently you are buying.
($2000) + ($1800) / 4 = DCA
Numbers plugged in as follows.
$3800 / 4 = 950
A total of 4 Bitcoin bought at $3800 equals $950 DCA. Each Bitcoin is an average of $950
Now let's re-plug the numbers with new variables.
($15000 x 0.5) + ($18000 x 0.5) + ($19000 x 0.5) + ($11000 x 0.5) / 2 = DCA
Understand why the number is divided by 2? That is the total number of Bitcoin over 4 purchases. Bought half a Bitcoin at $7,500 - $9000 - $9500 - $5,500
Total money spent $31,500 / Total Bitcoin acquired 2 = DCA
$31,500 / 2 coins (0.5 x 4 purchases) = 15750
Now I'll make the numbers realistic for recent weekly prices of 2022 June/July for retail holder who has minimal disposable income.
($19,247 x 0.003) + ($21104 x 0.004) + ($20,369 x 0.0036) + ($30,079 x 0.0047) + ($30,426 x 0.0028)
Realistic price fluctuations.
Total money spent 442.05 / Total Bitcoin acquired 0.01815 (5 fractional purchases) = 24355.37
($19,247 x 0.003) + ($21104 x 0.004) + ($20,369 x 0.0036) + ($30,079 x 0.0047) + ($30,426 x 0.0028) / 0.01815=24355.37
Now when you are ready to buy, instead of buying BTC straight away, you can set up spot orders with newly purchased stable coins ($DAI, $USDC, $BUSD etc) around this price or lower.
Successful targets will effectively lower your DCA in a bear market over time but you might have to wait days, maybe even weeks to hit target price, and you may not always hit target price depending on volatility.