I want to share a strategy that many traders use when the crypto market is highly volatile—that is, calculating the average cost when buying at different price levels.

Perhaps you've encountered this situation before: buying 1 BTC at $65,000, then the price drops to $58,000. At this point, instead of just waiting for the price to recover, you can buy an additional 1 BTC at a lower level. As a result, your average cost drops to $61,500/BTC instead of just waiting at the initial $65,000.

The calculation is very simple: divide the total amount spent by the total quantity purchased. In this case: ($65,000 + $58,000) divided by 2 = $61,500. So, you only need the price to reach $61,500 to break even, without waiting for it to go back to $65,000.

But the issue is: you want to make a profit, not just break even. If your goal is a 10% profit, you need to sell at $67,650. The formula is also straightforward: average cost × 1.10 = target selling price.

However, there's an important point to understand: this strategy only works well if you are confident that the asset will recover. If it continues to fall freely, you could get stuck, accumulating more losses. I've seen many people get trapped because they lack reserve funds to continue buying as the price keeps dropping.

Additionally, psychology is also a concern. Putting more money into an asset that's losing isn't always easy, especially if you're uncertain about the trend. Therefore, before applying the dollar-cost averaging strategy, make sure you have a clear plan and enough financial capacity to withstand adverse situations. You won't always make a profit, but when you do it correctly, it can help minimize your losses significantly.