Dollar Cost Averaging - My Experience and Overview
1) Dollar-cost averaging or DCA requires an investor to allocate a set amount of money at regular intervals, usually shorter than a year.
2) DCA is generally used for more volatile investments such as stocks or mutual funds.
3) There is a feature in Moomoo that allows you to do that - Regular Saving Plan or RSP. Below is the instructions to access the 2 features:
3) There is a feature in Moomoo that allows you to do that - Regular Saving Plan or RSP. Below is the instructions to access the 2 features:
Stock RSP: Menu>Market>US>RSP (you can also choose other stock markets like SG, HK or JP)
Fund RSP: Menu>Discover>Wealth>RSP
4) One of the reasons for using DCA in investment is to avoid emotional trading like FOMO buy (greed) and panic sell (fear). It is a good strategy for new investors. I have made a post about how I used Stock RSP to trade a stock using DCA strategy and made a profit. Read here:
My Investment Plan in the next Quarter
My Investment Plan in the next Quarter
5) The above doesn't mean Lump Sum (or LS) investment is bad. Whether it is DCA or LS, one should have an Exit Plan - take profit when the stock rises to your target profit and sell to cut loss when it is beyond your risk level.
6) Lastly I encourage new investors to try the DCA strategy using Papertrade to gain experience and confidence. Currently I am testing another strategy called modified Value Averaging or VA - a combination of DCA and TA.
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Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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I reflected trading experiences by writing journals. My comments are for educational purposes not financial advice.
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