Acronym Question

[CapeChem]

I see this often and i dont know what DCA is....Sorry...anyone

 

[ChemEng]

Dollar Cost Averaging. Instead of buying one big chunk or stocks, you buy it in smaller pieces across a time period.

 

[Guest2]

I see this often and i dont know what DCA is....Sorry...anyone

This has been hampered by the TSP Limits on ITF's (Interfund Tranfers).
But remember that many participant trade in common stock as well.

EXAMPLE:
Monday: I buy 10 shares of IBM for $100 ($10.00 per share)
Tuesday: I buy 10 shares of IBM for $50 ($5.00 per share)

I now own 20 shares of IBM stock which cost me $150.00
The cost of $150 divided by 20 shares = $7.50 per share average.
Keep on buying shares as they fall will lower your average cost per share.

Friday: stock rebounds back to its original price of $100 per share & sell.
You get $200 from your $150 investment.

If you sold the initial shares for a loss, then bought the second set of 10
shares and sold them when the price rebounded, then you'd only break
even. This is also done while stocks move up. Selling into any rally can
lock in gains and avoid greater losses in the same manner.

 

[CapeChem]

Thanks......Now i can read more intelligently

 

[james_smith]

Dollar cost averaging. It's a marketing gimmick used to sell investments that are losing value. People who promote DCA tell you to buy an investment even while it's losing money.