Dollar Cost Averaging (DCA)

A simple investment strategy which involves spreading total investment capital over a long period of time to reduce the effect of price volatility.

Dollar Cost Averaging (DCA) is a simple and common strategy whereby traders invest their capital periodically over time in a particular asset. By continually committing a specific amount of money on the asset, the trader gets more experienced and grows more familiar with the different dynamics of the price of the asset. Even more directly, a trader that uses DCA is less vulnerable to emotional decisions especially when there is instability in the market.

DCA is a common investment strategy because it is easy to do. There is no particular approach or style of using this strategy, except in choosing the amount to be invested and the asset to allocate these funds to.

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