Lesson 7 of 104:002 Sources
Dollar-cost averaging (DCA): the simplest strategy
Video coming soon
Educational content, not investment advice. Nour explains how markets work. She never tells you what to buy or sell.
DCA means investing equal amounts at regular intervals regardless of market conditions (FINRA).
- A fixed amount buys more units when prices are low and fewer when high.
- Example: $100 a month at prices 10, 8, 5, 8, 10 buys 65 units for $500 — average cost ≈ $7.69 vs average price $8.20; worth $650 at $10.
- Limits: FINRA notes DCA often returns less than lump-sum investing, especially over long periods, and per-trade fees can add up.
- Its main value is discipline: it removes some emotion and fits a monthly salary.
Quick check
Three questions. Pick an answer to see why.
1.$100 buys how many units when the price drops from $10 to $5?
2.In the lesson's example, why is the average cost per unit (~$7.69) lower than the average price ($8.20)?
3.What does FINRA say about DCA compared with lump-sum investing?
Sources
Every fact in this lesson is backed by the sources below.
- 1.FINRA – The Benefits and Limitations of Dollar-Cost AveragingDCA definition; buys more shares when low and fewer when high; removes emotion; often lower returns than lump sum; may help limit losses in a significant decline
- 2.FINRA – Dollar-cost averaging (fees per transaction)Per-transaction commissions can make DCA costlier than lump sum
Educational content, not investment advice. Risk warning: trading forex, CFDs, gold and crypto carries a high level of risk and may not be suitable for everyone. You can lose more than you put in. Souq Daily is an education platform. Nothing here is investment advice, a recommendation or an offer, and past performance does not predict future results.