Many people spam the term DCA whenever they are unsure of what to do next in the market. To be fair, it is by and large the best way to invest over long periods of time. However, there are dangers when executing DCA because this strategy does not work with all types of stocks. In addition to that, long term DCA might even result in losses during a severe downturn. At such a point, how would an investor who has used DCA for several years get out of that mess? In this post, we will be highlighting potential mistakes committed when executing DCA and how investors can avoid feeling stuck in the market.
DCA does not work well for growth stock during an aggressive rally
First of all, DCA is used to overcome the difficulties of timing the market in general hence, if you decide to DCA to accumulate a particular stock or ETF,