Dollar-cost averaging (DCA) means investing a fixed sum on a regular schedule — say monthly — regardless of the price on the day. When prices are low the fixed sum buys more units; when they are high it buys fewer. Over time this averages out the entry price and removes the pressure to "time" the market.
The real benefit is behavioural. By automating the decision, DCA sidesteps the temptation to wait for a perfect moment that never feels right, and it blunts the regret of buying just before a drop. It enforces discipline through volatility.
It is not a guarantee of profit, and research suggests that investing a lump sum at once has often beaten DCA on average simply because markets tend to rise over time. DCA's edge is psychological steadiness and risk-spreading, not a promise of higher returns.
Worked example
Investing $200 on the first of every month automatically buys more shares in the cheap months and fewer in the expensive ones.
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This definition is general education, not investment advice. Markets — especially crypto — are volatile and you can lose money. Please read our disclaimer and see our methodology.
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Frequently asked questions
What does Dollar-cost averaging (DCA) mean?
Investing a fixed amount of money on a regular schedule regardless of price, so you buy more units when prices are low and fewer when high.
Is Dollar-cost averaging (DCA) a crypto or a stock-market term?
It applies across both cryptocurrency and traditional stock markets.
Is this Dollar-cost averaging (DCA) definition financial advice?
No. The Market Capitalize glossary is educational — it explains terms and concepts, never a recommendation to buy or sell. See our disclaimer.