Dollar-Cost Averaging (DCA)
The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.
Also referred to as a "constant dollar plan". Investopedia Says:
Eventually, the average cost per share of the security will become smaller and smaller. Dollar-cost averaging lessens the risk of investing a large amount in a single investment at the wrong time.
In the U.K., it is known as "pound-cost averaging". Related Terms:
Adding To A Loser
Automatic Investment Plan
Average Down
Average Up
Compounding
Dividend Reinvestment Plan - DRIP
Mutual Fund
Value Averaging
Voluntary Accumulation Plan |