Dollar-cost averaging (DCA) means investing a fixed amount on a fixed schedule — say, $100 every week — regardless of what the price is doing that day.

Why it works

Nobody, including professional traders, reliably calls market tops and bottoms. DCA sidesteps that problem entirely: when the price is high, your fixed $100 buys less; when it's low, it buys more. Over time, this averages your purchase price out and removes the temptation to make emotional, all-at-once bets based on headlines.

What it isn't

DCA isn't a guarantee of profit — if an asset trends downward for years, averaging in won't save you. It's a risk-management technique for volatility, not a substitute for deciding whether an asset is worth holding at all.

Making it practical

  • Pick an amount you can commit to consistently, even in a downturn — that consistency is the entire point.
  • Automate it if you can, so decisions aren't made in the moment based on fear or excitement.
  • Review your plan periodically, but resist changing it based on short-term price swings.