Dollar-cost averaging
Also called: DCA
Dollar-cost averaging means investing the same amount at regular intervals, whatever the price, so you buy more shares when prices are low and fewer when they're high.
It removes the need to time the market and softens the effect of buying just before a fall. Research suggests lump-sum investing wins more often when markets rise, but dollar-cost averaging lowers the risk of regret.
Related terms
- Compound interest: Compound interest is interest earned on both your original money and the interest it has already earned, so savings grow faster over time.
- Risk management: Risk management in trading is limiting how much you can lose, through position sizing, stop-losses, diversification and avoiding too much leverage.
- Volatility: Volatility measures how much and how quickly a price moves up and down, usually as the annualized standard deviation of its returns.
Practise with $10,000 in play money
Free. No real money involved.
For learning only. This isn't financial advice.