The question of how much per buy looks technical. It is actually psychological. The right amount is not the largest your spreadsheet allows. It is the smallest that lets you sleep at night.
The wrong question first
Many people start with how much can I invest?. Wrong starting point. If you commit the maximum you can afford, the first big drop puts you in a fight between the plan and the rent.
Also wrong: how much would I like to invest?. The answer is almost always larger than what you actually tolerate in bad scenarios.
The question that actually helps
Try this instead: if I do not see this money for the next 2 years, do I start to worry?
If yes, the amount is too high. Lower it.
If no, there is room. You can raise it gradually later, once you have seen how you react to a real drawdown.
A good starting point for someone with regular income: 1% to 5% of monthly net income, split into daily or weekly buys. Not a rule. A starting point so you can see how it feels.
A simple stress test
Before locking in an amount, run this exercise in your head:
- Imagine that 6 months into DCA, Bitcoin is 40% below where you started.
- You have spent your amount times the buys of those 6 months.
- Every position is open and mark-to-market negative.
Ask yourself: do I keep going or do I cut?
If the answer is I cut, the amount was too large from the start. Try with half and run the exercise again. When you reach an amount you can keep paying without dramatic thoughts, that is yours.
