[burlesona]

Not really. Dollar cost averaging means that you trickle money into the market rather than putting it all in at once.

For example, suppose you got a $10k net bonus at work, and decided to put it all into the stock market.

One approach is just to put it all in right now. If the market generally moves up for a while that works out fine. But if you did this right before a big dip, you now spend a while waiting for things just to get back to even.

If you took a DCA approach you might instead invest $500 every week for 20 weeks. Then if there’s a big dip, only a little of your money was invested with “bad timing” and much of it probably came in during the dips and therefore was a better deal.

Note, though, that you get the opposite effect if you consider an investment that would have happened right before a giant boom.

So basically DCA means you’re going to just track the market closer and have less timing risk compared to making larger less frequent investments.