{"id":8806,"date":"2022-10-25T21:23:28","date_gmt":"2022-10-25T13:23:28","guid":{"rendered":"https:\/\/slashtraders.com\/?p=8806"},"modified":"2025-09-29T17:44:25","modified_gmt":"2025-09-29T09:44:25","slug":"dollar-cost-averaging","status":"publish","type":"post","link":"https:\/\/slashtraders.com\/en\/blog\/dollar-cost-averaging\/","title":{"rendered":"Dollar-Cost Averaging (DCA): Strategy, Benefits &amp; Real Examples"},"content":{"rendered":"<p class=\"wp-block-paragraph translation-block\">Purchasing blue-chip stocks through dollar-cost averaging is a popular investment strategy for building long-term wealth. This strategy can lower the cost per stock during high market volatility, and build a good habit of <a href=\"https:\/\/slashtraders.com\/en\/blog\/four-percent-rule-retirement-stocks\/\" target=\"_blank\" rel=\"noreferrer noopener\">accumulating valuable equity for retirement<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">We share what the dollar-cost averaging strategy is, and how to find the best stocks to buy over the long term to build equity and <a href=\"https:\/\/slashtraders.com\/en\/blog\/portfolio-management-stocks\/\" target=\"_blank\" rel=\"noreferrer noopener\">increase your portfolio<\/a>.<\/p>\n\n\n<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<span class=\"CjHfqYnP1LjmYxQJla52M1SpqwvmI8PO8IkTeugMdxizEeV3OWRgiFsKzB6o9sVhTok64ryD5hl7Q3WRN7cCU\"><iframe title=\"What Makes Dollar-Cost Averaging a Great Way to Invest?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/yc9CtFTzhpk?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/span>\n<\/div><\/figure>\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"\u73fe\u5728\u6700\u4f73\u7684strangle\u9078\u64c7\u6b0a\u9032\u5834\u6a5f\u6703\">What Is Dollar-Cost Averaging?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">Dollar-cost averaging is a long-term investment strategy that uses the same amount of money to <a href=\"https:\/\/slashtraders.com\/en\/blog\/best-blue-chip-stocks-dividends\/\" target=\"_blank\" rel=\"noreferrer noopener\">purchase the same great stock<\/a> at regular intervals. It can average the cost per stock, especially in a volatile market:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Our budget can buy fewer stocks when the price is high.<\/li>\n\n\n\n<li>You can buy more units when the stock price drops.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"\u73fe\u5728\u6700\u4f73\u7684strangle\u9078\u64c7\u6b0a\u9032\u5834\u6a5f\u6703\">Dollar-Cost Averaging vs Lump Sum Investing<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">We need to define both the investment budget and the investment interval.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Looking back on the price trends of AMD over the last year, we can see the stock price has been bearish during this period. We can simulate the dollar-cost averaging strategy for buying stocks on the first trading day of each month.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-full\"><img fetchpriority=\"high\" decoding=\"async\" width=\"980\" height=\"578\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/10\/amd-dollar-cost-averaging.png\" alt=\"amd dollar cost averaging\" class=\"wp-image-8808\" srcset=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/10\/amd-dollar-cost-averaging.png 980w, https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/10\/amd-dollar-cost-averaging-300x177.png 300w, https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/10\/amd-dollar-cost-averaging-768x453.png 768w, https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/10\/amd-dollar-cost-averaging-18x12.png 18w\" sizes=\"(max-width: 980px) 100vw, 980px\" \/><figcaption class=\"wp-element-caption\">Purchase AMD with the same budget at the first trading day of each month.<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">A $1,000 investment budget every month over the whole year lets us buy 114 stocks for $11,295.64.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">On the other hand, a lump sum investment budget of $12,000 upfront lets us buy 95 stocks for $11,896.85.<\/p>\n\n\n\n<table id=\"tablepress-43\" class=\"tablepress tablepress-id-43\">\n<thead>\n<tr class=\"row-1\">\n\t<th class=\"column-1\">Trading days<\/th><th class=\"column-2\">AMD closing price<\/th><th colspan=\"3\" class=\"column-3\">Dollar-cost averaging with $1,000\/month<\/th><th colspan=\"3\" class=\"column-6\">Lump sum with $12,000<\/th>\n<\/tr>\n<\/thead>\n<tbody class=\"row-striping row-hover\">\n<tr class=\"row-2\">\n\t<td class=\"column-1\"><\/td><td class=\"column-2\"><\/td><td class=\"column-3\">Stocks purchased<\/td><td class=\"column-4\">Actual investment<\/td><td class=\"column-5\">Cost per stock<\/td><td class=\"column-6\">Stocks purchased<\/td><td class=\"column-7\">Actual investment<\/td><td class=\"column-8\">Cost per stock<\/td>\n<\/tr>\n<tr class=\"row-3\">\n\t<td class=\"column-1\">2021\/11\/1<\/td><td class=\"column-2\">$125.23<\/td><td class=\"column-3\">7<\/td><td class=\"column-4\">$876.61<\/td><td class=\"column-5\">$125.23<\/td><td class=\"column-6\">95<\/td><td class=\"column-7\">$11,896.85<\/td><td class=\"column-8\">$125.23<\/td>\n<\/tr>\n<tr class=\"row-4\">\n\t<td class=\"column-1\">2021\/12\/1<\/td><td class=\"column-2\">$149.11<\/td><td class=\"column-3\">6<\/td><td class=\"column-4\">$894.66<\/td><td class=\"column-5\">$149.11<\/td><td class=\"column-6\"><\/td><td class=\"column-7\"><\/td><td class=\"column-8\"><\/td>\n<\/tr>\n<tr class=\"row-5\">\n\t<td class=\"column-1\">2022\/1\/3<\/td><td class=\"column-2\">$150.24<\/td><td class=\"column-3\">6<\/td><td class=\"column-4\">$901.44<\/td><td class=\"column-5\">$150.24<\/td><td class=\"column-6\"><\/td><td class=\"column-7\"><\/td><td class=\"column-8\"><\/td>\n<\/tr>\n<tr class=\"row-6\">\n\t<td class=\"column-1\">2022\/2\/1<\/td><td class=\"column-2\">$116.78<\/td><td class=\"column-3\">8<\/td><td class=\"column-4\">$934.24<\/td><td class=\"column-5\">$116.78<\/td><td class=\"column-6\"><\/td><td class=\"column-7\"><\/td><td class=\"column-8\"><\/td>\n<\/tr>\n<tr class=\"row-7\">\n\t<td class=\"column-1\">2022\/3\/1<\/td><td class=\"column-2\">$113.83<\/td><td class=\"column-3\">8<\/td><td class=\"column-4\">$910.64<\/td><td class=\"column-5\">$113.83<\/td><td class=\"column-6\"><\/td><td class=\"column-7\"><\/td><td class=\"column-8\"><\/td>\n<\/tr>\n<tr class=\"row-8\">\n\t<td class=\"column-1\">2022\/4\/1<\/td><td class=\"column-2\">$108.19<\/td><td class=\"column-3\">9<\/td><td class=\"column-4\">$973.71<\/td><td class=\"column-5\">$108.19<\/td><td class=\"column-6\"><\/td><td class=\"column-7\"><\/td><td class=\"column-8\"><\/td>\n<\/tr>\n<tr class=\"row-9\">\n\t<td class=\"column-1\">2022\/5\/2<\/td><td class=\"column-2\">$89.84<\/td><td class=\"column-3\">11<\/td><td class=\"column-4\">$988.24<\/td><td class=\"column-5\">$89.84<\/td><td class=\"column-6\"><\/td><td class=\"column-7\"><\/td><td class=\"column-8\"><\/td>\n<\/tr>\n<tr class=\"row-10\">\n\t<td class=\"column-1\">2022\/6\/1<\/td><td class=\"column-2\">$101.22<\/td><td class=\"column-3\">9<\/td><td class=\"column-4\">$910.98<\/td><td class=\"column-5\">$101.22<\/td><td class=\"column-6\"><\/td><td class=\"column-7\"><\/td><td class=\"column-8\"><\/td>\n<\/tr>\n<tr class=\"row-11\">\n\t<td class=\"column-1\">2022\/7\/1<\/td><td class=\"column-2\">$73.67<\/td><td class=\"column-3\">13<\/td><td class=\"column-4\">$957.71<\/td><td class=\"column-5\">$73.67<\/td><td class=\"column-6\"><\/td><td class=\"column-7\"><\/td><td class=\"column-8\"><\/td>\n<\/tr>\n<tr class=\"row-12\">\n\t<td class=\"column-1\">2022\/8\/1<\/td><td class=\"column-2\">$96.78<\/td><td class=\"column-3\">10<\/td><td class=\"column-4\">$967.80<\/td><td class=\"column-5\">$96.78<\/td><td class=\"column-6\"><\/td><td class=\"column-7\"><\/td><td class=\"column-8\"><\/td>\n<\/tr>\n<tr class=\"row-13\">\n\t<td class=\"column-1\">2022\/9\/1<\/td><td class=\"column-2\">$82.33<\/td><td class=\"column-3\">12<\/td><td class=\"column-4\">$987.96<\/td><td class=\"column-5\">$82.33<\/td><td class=\"column-6\"><\/td><td class=\"column-7\"><\/td><td class=\"column-8\"><\/td>\n<\/tr>\n<tr class=\"row-14\">\n\t<td class=\"column-1\">2022\/10\/3<\/td><td class=\"column-2\">$66.11<\/td><td class=\"column-3\">15<\/td><td class=\"column-4\">$991.65<\/td><td class=\"column-5\">$66.11<\/td><td class=\"column-6\"><\/td><td class=\"column-7\"><\/td><td class=\"column-8\"><\/td>\n<\/tr>\n<\/tbody>\n<tfoot>\n<tr class=\"row-15\">\n\t<th class=\"column-1\">Total<\/th><td class=\"column-2\"><\/td><th class=\"column-3\">114<\/th><th class=\"column-4\">$11,295.64<\/th><th class=\"column-5\">$99.08<\/th><th class=\"column-6\">95<\/th><th class=\"column-7\">$11,896.85<\/th><th class=\"column-8\">$125.23<\/th>\n<\/tr>\n<\/tfoot>\n<\/table>\n<!-- #tablepress-43 from cache -->\n\n\n\n<p class=\"wp-block-paragraph translation-block\">The average cost per stock is $99.08 for the dollar-cost averaging strategy, while the lump sum investment costs us $125.23 per stock.\nSo a dollar cost averaging investment plan lets us reduce the cost per stock in a <a href=\"https:\/\/slashtraders.com\/en\/blog\/bear-call-spread-delta-hedge\/\" target=\"_blank\" rel=\"noreferrer noopener\">bearish market<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Advantages of Dollar-Cost Averaging<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Dollar-cost averaging lets us build a good habit in buying <a href=\"https:\/\/slashtraders.com\/en\/blog\/undervalued-dividend-kings-list\/\" target=\"_blank\" rel=\"noreferrer noopener\">great stocks<\/a> with mechanical regularity.<\/li>\n\n\n\n<li class=\"translation-block\">It reduces how the <a href=\"https:\/\/slashtraders.com\/en\/blog\/market-volatility-hv-iv\/\" target=\"_blank\" rel=\"noreferrer noopener\">market fluctuations<\/a> impact our emotions. This can prevent us from making emotional and costly mistakes.<\/li>\n\n\n\n<li class=\"translation-block\">It can average out the cost per stock during a volatile market, and reduce the pressure of <a href=\"https:\/\/slashtraders.com\/en\/blog\/swing-trading-strategies\/\" target=\"_blank\" rel=\"noreferrer noopener\">timing the market<\/a>.<\/li>\n\n\n\n<li class=\"translation-block\">A good way to <a href=\"https:\/\/slashtraders.com\/en\/blog\/best-reits-to-invest-in\/\" target=\"_blank\" rel=\"noreferrer noopener\">accumulate income-earning assets<\/a> slowly over time without a large sum of money upfront.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">When Dollar-Cost Averaging Doesn\u2019t Work<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>In a prolonged bullish market, the returns are lower than the lump sum investment strategy.<\/li>\n\n\n\n<li>This strategy only works for the long term, not the short term. An impatient investor may not get a good return if he cannot hold his nerves during a market downturn.<\/li>\n\n\n\n<li>Investing in poorly managed companies long term can lead to accumulating badly performing stocks and losses.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image aligncenter size-full\"><a href=\"https:\/\/slashtraders.com\/en\/pricing\/?utm_source=blog&amp;utm_medium=banner\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" width=\"971\" height=\"120\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/03\/slashtraders-trial-banner.png\" alt=\"slashtraders trial banner\" class=\"wp-image-7387\" srcset=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/03\/slashtraders-trial-banner.png 971w, https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/03\/slashtraders-trial-banner-300x37.png 300w, https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/03\/slashtraders-trial-banner-768x95.png 768w, https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/03\/slashtraders-trial-banner-18x2.png 18w\" sizes=\"(max-width: 971px) 100vw, 971px\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Great Stocks to Buy With Dollar-Cost Averaging<\/h2>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">The <a href=\"https:\/\/slashtraders.com\/en\/tools\/best-value-stocks\/\" target=\"_blank\" rel=\"noreferrer noopener\">Bullish Value Stocks<\/a> is a list of blue-chip stocks fit for long-term investment, and it uses Fair Value to help us find undervalued opportunities. We also use technical analysis to help time the bullish trends.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><img decoding=\"async\" width=\"1024\" height=\"573\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/10\/ntdoy-bullish-value-stocks-1024x573.png\" alt=\"ntdoy bullish value stocks\" class=\"wp-image-8814\" srcset=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/10\/ntdoy-bullish-value-stocks-1024x573.png 1024w, https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/10\/ntdoy-bullish-value-stocks-300x168.png 300w, https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/10\/ntdoy-bullish-value-stocks-768x430.png 768w, https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/10\/ntdoy-bullish-value-stocks-18x10.png 18w, https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/10\/ntdoy-bullish-value-stocks.png 1120w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Nintendo is the most undervalued blue-chip stock right now.<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">By sorting the list by Upside, we can find value <a href=\"https:\/\/slashtraders.com\/en\/blog\/margin-of-safety-formula\/\" target=\"_blank\" rel=\"noreferrer noopener\">stocks with the greatest margin of safety<\/a>.\nNTDOY is the most undervalued stock right now. <a href=\"https:\/\/www.nintendo.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Nintendo<\/a> has a strong global brand, and its Nintendo Switch is one of the top 3 gaming platforms in the world, making NTDOY a competitive blue-chip company.<\/p>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">It is currently heavily undervalued with a 501% of Upside potential. It also has around 3% <a href=\"https:\/\/slashtraders.com\/en\/tools\/dividend-stock-screener\/\" target=\"_blank\" rel=\"noreferrer noopener\">dividend yield<\/a> per year, making NTDOY a <a href=\"https:\/\/slashtraders.com\/en\/blog\/best-value-investing-stocks\/\" target=\"_blank\" rel=\"noreferrer noopener\">good value stock to buy and hold<\/a> for the long term.<\/p>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">The <a href=\"https:\/\/slashtraders.com\/en\/blog\/fundamental-analysis-vs-technical-analysis\/\" target=\"_blank\" rel=\"noreferrer noopener\">technical indicator<\/a>, Long Signal Days, shows that Nintendo has had a bullish signal since 22 trading days ago, so now is a good time to enter the bullish trade.<\/p>\n\n\n\n<p class=\"has-ast-global-color-4-background-color has-background wp-block-paragraph\"><a href=\"https:\/\/slashtraders.com\/en\/blog\/slashtraders-vs-sp500\/\" target=\"_blank\" rel=\"noreferrer noopener\">SlashTraders vs S&amp;P 500: 450% Outperformance, Verified Trades and How to Copy Every Alert<\/a><\/p>","protected":false},"excerpt":{"rendered":"<p>Dollar-cost averaging can lower the average cost of purchasing stocks, especially in a volatile market. We share tips for building equity in the long term with this strategy.<\/p>","protected":false},"author":1,"featured_media":8807,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"plain-container","ast-site-content-layout":"normal-width-container","site-content-style":"unboxed","site-sidebar-style":"unboxed","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":"","_wp_rev_ctl_limit":"5"},"categories":[3],"tags":[60,56,12,64,59,11],"class_list":["post-8806","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-amd","tag-cn","tag-en","tag-es","tag-stocks","tag-tw"],"_links":{"self":[{"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/posts\/8806","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/comments?post=8806"}],"version-history":[{"count":5,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/posts\/8806\/revisions"}],"predecessor-version":[{"id":13944,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/posts\/8806\/revisions\/13944"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/media\/8807"}],"wp:attachment":[{"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/media?parent=8806"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/categories?post=8806"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/slashtraders.com\/en\/wp-json\/wp\/v2\/tags?post=8806"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}