Dollar-Cost Averaging
Dollar-cost averaging is investing a fixed cash amount on a schedule — you buy more shares when price is down, fewer when up.
Definition
Dollar-Cost Averaging refers to cost averaging is investing a fixed cash amount on a schedule — you buy more shares when price is down, fewer when up. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
It shows up in factor research, attribution, and capacity debates — whether a return slice is skill, style, or fee drag. When cost averaging is investing a fixed cash amount on a schedule — you buy more shares when price is down, fewer when up shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what dollar-cost averaging is saying. If cost averaging is investing a fixed cash amount on a schedule — you buy more shares when price is down, fewer when up moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Check definition stability across universes, costs, and regimes before treating a backtest as portable. Prefer a short written null hypothesis for Dollar-Cost Averaging: what would falsify the current reading in the next window?
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