Dollar-cost averaging (DCA) means investing a fixed dollar amount on a regular schedule — say $200 every month — regardless of whether the market is up or down, instead of trying to pick the perfect moment to buy.
When you invest the same dollar amount each period, you automatically buy MORE shares when the price is low and FEWER when it is high. That removes the emotional pressure of timing the market and spreads your entry across many prices, so a single unlucky purchase date can't dominate your result. It is a discipline and risk-management tool, not a way to maximize returns.
Example (illustrative): you invest $300 a month for three months while a share trades at $30, then $20, then $25. You buy 10, 15, and 12 shares — 37 shares for $900 total, an average cost of about $24.32 per share. That is lower than the simple average price of $25, precisely because your fixed budget bought more shares in the cheap month. The prices here are made up to show the mechanic, not a prediction of any stock.
No. DCA lowers the risk of buying everything at a single bad price, but it can't turn a losing investment into a winning one or protect you from a market that keeps falling.
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Educational research only — not investment advice.