Dollar Cost Averaging Explained

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Dollar Cost Averaging Explained | Coffee With Markus | Episode 43

If you've followed the markets for any length of time, you've likely heard of "dollar-cost averaging."

Dollar-cost averaging is a simple investment strategy where no matter what the market is doing, you're investing a set amount each week, month, quarter, year etc. in certain security...as you can see it's not the most sophisticated investment strategy.

This strategy became pretty popular around the nineties when the market was just going straight up. So what I've done is run some analysis on a couple of different stocks to see how dollar-cost averaging would have performed.

So I looked back over the last 17 months on AAPL to see how it would have performed using dollar-cost averaging.

The idea I've mapped out is that each month you would invest $1000/month in AAPL stock. So looking at the end you would end up with around 69 shares and invested nearly $15,000.

And in this scenario, you would have turned a nice $7000 in profits, not too bad, right? So is this strategy a "winner?" Well, let's take a look at IBM and see how it works out on it.

Over this same 17 months in IBM, we would have lost a little over $1500...not too good :(

So as you can see, it's not a perfect strategy and I think it's...a little stupid.

You have to make sure you're picking stocks like AAPL, that will maintain solid growth for the long term which can be pretty tricky. So in my opinion, I think as a trader using the PowerX Strategy we can run circles around the dollar cost average method.

I receive a lot of questions about this, so I hope this helps!

During these live sessions, I'll cover LIVE stock market action and share how I'm currently trading the markets with my live account.

These sessions are a great way to keep a pulse on what is happening in the stock market each day.

During these sessions, we'll also discuss topics like:

- Stock Trading
- Options Trading
- Futures Trading
- Binary Options
- Earnings Trading
- Swing Trading
- Day Trading
- Real Estate

Don't forget to subscribe to my channel, so you'll never miss a market update or one of my live "Coffee With Markus" sessions.

#dollarcostaveraging #dollarcostaveragingexplained #LiveTrading
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MARKUS you make every day a great day. And some days a very lucrative day . Thank you sir.

seanntomas

Awesome video! Does the PowerX book ship to Mexico? Also, Can you explain in another video how to set stoploss and takeprofit levels for the options trading strategy?

cgb