Retail trading platform Robinhood has set up a new feature that will allow traders to activate the trading strategy- dollar-cost averaging (DCA) on their portfolios at a free cost. The timespan for this new feature is limitless and could be done either daily, weekly, bi-weekly or monthly. This is geared towards making crypto investment easy for users on the trading platform.
Robinhood had burst into the spotlight during the controversy surrounding Gamestop (GME) stocks earlier this year. Its popularity would later soar following the emergence of meme cryptocurrency, Dogecoin, which eventually accounted for a significant measure (62%) of its trading revenue in Q2. The new feature is also likely to attract hundreds of retail investors and traders to the platform since they would be able to make controlled investments at intervals rather than a one-time investment.
New Feature to Allow Buy Crypto Asset at Intervals and for Free
Taking effect on Wednesday, users can now make recurring investments for free on several cryptocurrencies and trading pairs, whether daily or weekly, depending on their preferences. Apart from helping them hedge against extreme volatility in the market, this new feature will also assist in saving costs despite engaging in multiple investments.
The Dollar Cost Averaging (DCA) is a trading strategy traders mostly employ when the market seems choppy and is likely to incur huge losses for inexperienced and amateur investors. With the strategy, an investor is allowed to buy a crypto asset at intervals such that he spreads his funds across varying prices of the asset, making him less likely to get hugely affected if such an asset moves further to the downside.
Robinhood’s new feature will allow a minimum purchase amount of $1 without attracting extra costs. Other details attached to the new feature indicate that recurring buy or sell orders will be processed between the hours of 6:30 pm to 8:00 pm UTC. Although there are times when prices may settle at different prices- usually less- due to negative slippage that results from volatility, Robinhood noted that the differences will be returned in fiat to any user who suffers such after the trade has been completed.
DCA Service Not Available to New York Users
According to Robinhood, its users in New York will not have access to the service, perhaps owing to regulatory issues. Crypto trading accounted for 41% of Robinhood’s revenue as per its Q2 report such that it generated $233 million from crypto trading services alone between April and June.
Meanwhile, Robinhood’s IPO application is hanging in the air after the US SEC launched an investigation into its affairs in May based on allegations relating to fraud and causing investors’ losses. Robinhood had admitted in July that if the momentum generated by meme token Dogecoin trailed off, its revenue was likely to be affected.
