Dollar-cost averaging with eToro new feature: the recurring deposits

Recurring deposits are a new feature that could allow you to set up a dollar-cost averaging schedule with eToro, on autopilot. Should you use it? And how? Let’s find out! (Bonus: +2 free tools/simulators at the end).

trading anxiety

Investing is not always fun.

Sometimes you can feel stressed and irritated by all of your options, especially if you’re worried that the price may drop and you’ll lose money on a purchase.

Behavioral economists note that most people are inherently loss-averse—they tend to react more strongly to losses (or the prospect of them) than to gains.


As a (future) successful investor, you need to be self-aware about your emotional and psychological biases and acknowledge the importance of keeping your financial plan as organized as possible so that you’re not tempted to make rash decisions when it comes time to invest.

Here is a simple investment receipt that may help you:
The dollar-cost averaging method (“DCA”).

Is dollar-cost averaging a good strategy? Can DCA make you rich?

Dollar-cost averaging is a strategy that seeks to lessen volatility risks by constituting your position over time.

Rather than acquiring investments at a particular price point (aka, trying to time the market), with dollar-cost averaging, you buy in smaller equal dollar amounts at regular intervals, regardless of price.

(…) break your investment into pieces and put a portion of your money into the market at equal time intervals, regardless of whether the market is at an all-time high or in the middle of a sell-off.


It’s one of the most straightforward procedures to apply, and it’s a great way to exercise buy-and-hold investing.

Does dollar-cost averaging work? Is it good or bad?

The DCA strategy is the most beneficial during bear markets and with securities that produce dramatic price fluctuations. Those moments and those types of investments are where reducing investor anxiety and fear of missing out tend to be the most important.

The ideal would be to buy low, but it’s impossible to determine with certainty where that perfect entry is unless you have a crystal ball.

Dollar-cost averaging strategy

That’s why dollar-cost averaging is usually a better strategy. Instead of making one significant investment at some arbitrary time, you will spread your investments out over time by consistently investing smaller amounts over an extended period.

While it does not guarantee you the lowest cost basis on your investments, it can produce a lower average cost basis over a more extended period.

Let’s balance the pros and cons of the dollar-cost averaging formula over the following sections.

What Are The Potential Downsides Of Dollar-Cost Averaging?

It’s a known fact that you can not forecast whether the market will go up or down on any specific day, week, or even year. But you can nevermind expect that the total return of markets shifts favorable over a sufficiently long period.

“Can you lose money with dollar-cost averaging?” The answer is YES.

Loose Money with Dollar-Cost Averaging strategy

Indeed, if you wait with most of your money on the sidelines, that stack is not working to build your net worth. 

A research paper by Vanguard pointed out that a lump-sum investment will outperform DCA roughly two-thirds of the time.

But lump-sum investing, aka dumping your money at once, can be a dangerous practice:

  • If you guess wrong, your loss can be considerable.
  • You will deal with emotional challenges and no diversification in the purchase price—both of them are susceptible to encourage you towards counterproductive behaviors.
  • Timing the market will be a temptation, but it is almost impracticable, even for professional investors. 

Dollar-cost averagingMarket timing
‣ Means investing set amounts at regular intervals
‣ Can remove emotion from investing
‣ The focus is on consistency and disregards market performance.
‣ May delay investments based on market conditions
‣ May lead to regret or procrastination.
‣ Focus is on adding money at the right time and can lead to higher returns — or losses.

Is dollar-cost averaging right for you?

The DCA strategy is suited for investors with lower risk tolerance and a long-term investment horizon.

Dollar-cost averaging is a simple strategy that allows an investor to benefit from turbulence in the stock market without second-guessing it. 


The key advantages of a DCA strategy:

  • Resolve the challenge of capital allocation: it is a time-tested procedure that can assist you in buying more when prices are lower. 
  • Skip the emotional factor: removes some of the stress and the irrational behavior. 

People who use this technique won’t be as vulnerable to overconfidence or panic during times of extreme market volatility. In addition, by avoiding psychological bias, you will take advantage of falling prices when everyone else becomes scared.

  • Set-it-and-forget-it investing method: if you set up regular, automatic contributions, you’re less likely to miss your plan. You keep investing the same amount of cash as clockwork.
  • Build a disciplined investing habit: make a consistent plan and stick to it no matter what happens.
  • Minimizing regrets: when you invest a large sum of money at once, you’re more likely to feel guilt if that trade turns out to be poorly timed.

How to Use Dollar-Cost Averaging to Build Wealth Over Time

If you are convinced by now that this strategy is made for you, here is the roadmap to apply DCA to boost your investment returns over time:

1) Determine how much funds you want to invest.

2) Pick how often you want to invest.

3) Choose how many periods you want to split the investment over.

4) Decide the dollar amount invested at each interval.

5) Stick with the plan, no matter what markets do on a particular day or week.

Set your investment goals

E.g. invest a total of $6,000 through a $100/month schedule spread over the next 5 years (= 60 occurrences).

Ready to get started? Set up your recurring deposits with eToro:

eToro is a social trading company that allows its users to watch the financial trading activity of other users, copy them, and make their own trades.

Their new feature, “recurring deposits”, could allow you to set up an automatic deposits schedule to feed your investment on assets, popular investors (copy top-performing traders), or copyportfolios (AI managed funds).

? Discuss or act on the news on the world’s largest social investment platform:

67% of retail investor accounts lose money when trading CFDs with this provider.

You should consider whether you can afford to take the high risk of losing your money.

Here is the process to set up your brokerage account to deposit funds automatically and regularly so that you can sit back and do the things you love :)

? What are recurring deposits? The new eToro feature:

eToro Recurring Deposits: new feature

It’s an option to set up automatic deposits in your account. First, you decide the amount of money and the currency, and then schedule your deposits using a credit/debit card that has already been connected to your eToro account.

? How? Here is the step by step process to set up a recurring deposit schedule with eToro:

1️⃣ Go to “Settings” and click on “Payments.”

2️⃣ Then click on the banner titled “Recurring Deposits.”

3️⃣ Select the amount and currency.

4️⃣ Choose one of the debit/credit cards connected to your eToro account.

5️⃣ Select the frequency of your deposit:

– Weekly: an automatic deposit is made once a week.

– Bi-weekly: an automatic deposit occurs every two weeks.

– Monthly: an automatic deposit occurs once a month.

6️⃣ After selecting the frequency, you can customize the date and/or day of the deposit or accept the default option, a monthly deposit occurring on the 1st of each month.

Ex. You can set the deposits for a specific date (like the 10th. of each month) or a specific day (the first Monday of each month).

⚠️ Note: You can view your scheduled deposits or make changes (“Settings”> “Payments”).

? Quick eToro’s FAQ about recurring deposits:

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At the moment, all users in all clubs can set up recurring deposits, except for users from the US.

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The minimum is 50 USD.

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Unfortunately, users need to cancel the recurring deposit entirely and set a new one.

Dollar-Cost Averaging: The financial takeaway

No matter how much expertise you have, investing can be quite an emotional rollercoaster. 

Dollar-cost averaging can be your antidote that helps reduce the anxiety around investing as you consistently put money in the market, regardless of whether things are flourishing or collapsing. 

DCA also comes in handy for investors starting with a low budget who do not have a lump sum available to spend—throw an extra $100 (or more) at a schedule until you reach your objective.

Trading with low budget: DCA, Dollar-Cost Averaging

Extra Resources for your investment planification:

? Forecast how your investment could grow over time with DCA and compound interest: start a simulation.

? Put your cryptocurrency investment on autopilot, see how DCA would have performed depending on different criteria: open the calculator.

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