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Cost averaging strategy
Cost averaging strategy is buying a stock at a fixed amount on a regular basis. Cost averaging is very useful because you won’t know whether current stock price is low or high. By buying on regular basis, you’ll average the cost of stock you bought. You might buy some stocks when price are low and some stocks when price are high. The cost per share will then averages out. So it will minimize the risk of buying shares at the wrong time (when price is high). For example when you have $1,000, instead on spending all the money once on a stock, spread the investment for several months. You can buy stock $200 a month for the next 5 months.



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