DCA Explained With Candy

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It’s ultimately an average of all the prices you buy at. Let's say if you buy a total of 5 pieces of candy for example at 1 dollar then that’s your average. However if one of those purchases is higher than 1 dollar it pulls up your average. If any of the purchases is lower it pulls down your average purchase. Because the price dropped, any buy you make at this time less than 25 cents will ultimately pull down your average. At some point as the price rises, if you keep on buying you’ll be pulling up your average though. If you bought candies 5x at the price of 1 dollar but then you buy 5 more candies for 3 dollars… now it’s 20 dollars/10 items = 2 dollars per candy.

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