Dollar-cost averaging is a valid strategy for buying securities. Whether it ought to be used usually depends on the volatility of the markets. If the market for a security is trending up, dollar-cost averaging can prove more costly. If the market tends to be volatile, or erratic, dollar-cost averaging procedure will result in lower-cost.
There is also evidence against its employment. Still, dollar-cost averaging continues to be used by investors and is recommended by most financial advisers.
Moreover, it has psychological appeal when an investor has to commit to a large purchase and prices are erratic from day to day.
Also, the popularity of dollar-cost averaging comes from examples that show its use results in greater stock holdings across the stock market cycle, compared to a one-time, lump-sum investment. ( See the Earl J Weinreb NewsHole® comments.)
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