DCA

Dollar Cost Averaging (DCA) is a trading and investment strategy which involves splitting a transaction into multiple smaller transactions to be executed at a specified time interval. This strategy can be automated on behalf of the user, so one does not have to manually perform each transaction themselves.

There are a number of use cases and strategies for which DCA is useful, but the main purpose is to hedge against volatility. Rather than trying to time the market and execute an order in one large lump sum, breaking the order into smaller transactions over a period of time will cause them to be executed at varying prices. Oftentimes using DCA causes the overall cost basis to be more favorable than trying to time one large trade.