Timing DCA investments - mth - week - day - hr

I have watched the ASX market move up, down, and sometimes sideways in a day and it seems to be becoming more difficult to apply any logic to what's happening lately.

Is there a time of day, week or even month which is proven to be a sweet spot to buy in?

Or does anyone know where I would begin to look for such trends?

For example a price dip following lunch, last day of the month, following a public holiday etc.

I'm just wondering if there is a slight positive that can be applied to DCA buy-ins that will assist over a long term.

Thanks and all the best for 2021 PCers..

 

Simply, No.

DCA is about avoidance of regret not market timing.

 

This.

Trust me, most of us have tried doing exactly what your thinking about and gave up. I always figure after a strong day we might get a move in the other direction so will hold back and buy the dip. The amount of times I did that to only have the market move up further.
In the hope of buying in at a 1% or so dip I end up missing out on the 2-3% jump. Then I end up buying after the market moved up that 2-3%. Only then does the market dip arrive.

That’s why I gave up and just put all available cash in. Can’t promise I will never try and time again. Maybe this next time will be different and I will get the timing right.

 

Don’t over think it. The point of DCA, buy and hold etc is to avoid worrying about these kind of things.

 

If a company is worth buying and you are holding for the long term 2% difference at buying will make SFA difference. Daily price movement in 3 or 5 years could be 10x that. There is a way but it doesnt involve buying in dips. It involves buying before price jump, where 5% gains can be made in minutes but you have to time it to seconds. I cant tell how you because it's effectiveness will reduce when more people do it. It involves observation, sometimes of illiquid low cap stocks after some high performing fund manager has tipped it, and observing market depth. If that fails and there is large buying depth often just putting in a low ball order and waiting a month even adjusting it lower as it falls. Often after 2 or 4 weeks buying depth wiill disapate as buyer get their fill or move on, after which new buyers will come back into the market enticed by price reduction then a more steady rise may occur. For more liquid shares often after reporting can be a good time to buy as often an excellent report is given you know where the company is at can buy with confidence and as a bonus the share price falls. Yes illogical ! Sometimes buyer's buy in anticipation of a great report ,overshoot and have spent their money, AKA FOMO.. Buy on results, metrics and company guidance.

 

Vanguard did a study on DCA versus Lump Sum:
http://www.smartretirement.com.au/wp-content/uploads/2015/06/7.23.2012_Dollar-cost_Averaging.pdf

And have a watch of some youtube videos such as

or

I think the first one I linked to, does a little experiment, that even if you bought at the top of the market right before each major crash, you'll still be ahead by holding on.

If I had a loan facility sitting idle during a crash, then I would buy the dip then, but I certainly wouldn't be delaying my investment strategy waiting for a correction. That's my approach.


If you're only investing amounts based on how much you can save, there are many calculators out there to tell you at what interval to invest based on your expected return, and the brokerage.
The last calculator website I used has gone dead, but this is the maths behind it
Frequency of investments to maximise returns (and minimise fees)

 

I have felt that the market dips before a long weekend but that could just reverse the gains from the day before and so the stock could just be at the same price from the day before that and higher than 3 days before.

I doubt there is any rhyme or reason that can be distilled to predict the small fluctuations in price movements

 

For long term investing - Have a plan and then buy as much as you can as often as you can according to the plan.
It is so boring but compounding is very effective

 

When you DCA do you just buy at market?

I have been buying a certain share every month but put my order in slightly lower than what it is currently trading at. I find I am trying to squeeze a bit extra out. the first one took me several days to end up buying, but now I make the gap smaller and usually the order gets filled the same day.

 

@Terry I always buy at price limit. In answer to your question - it depends.
I might do what you are suggesting if the order is $10k or less and the stock is very liquid.
I will set a price I am prepared to pay for stocks that are less liquid as sometimes the asking sell price is just an ambit bid in my mind.
Sometimes the value of my orders might mean I offer at the next sell price or even split the order
I cancel any order at the end of the day if none of the order has been filled

 

I always buy at limit, but I will normally set my limit higher than the current market price.

The only reason I do this though is so I can adjust the number of shares being purchased at what price so that I can use up as close to every last penny in my trading account as possible and not have left of cash sitting there.

 

This is exactly why I went from ETFs to vanguard wholesale with the BPay option. One less thing to worry about.

 

It would seem the document is copyright so I've only posted the link which was sent to me recently.

Goes into a reasonable length discussion on DCA v Lump Sum which some may find informative.

https://www.pwlcapital.com/wp-conte...llar-Cost-Averaging-vs-Lump-Sum-Investing.pdf

 

Great read.

 

@Terry_w ...This is the type of advice I was hoping for ...and it has squeezed some further discussion, alternates and experiences from our members...cheers

I’m just trying to apply some small advantage to DCA.

It seems funny as long term/DCA investors we often anguish over 0.0?% MER from fund managers but could be leaving ?.00% on the table each trade.

Keep the ideas coming PCers...
Thank you

 

Just for clarity @PJ1 although I responded to a DCA question from @Terry_w my response was more about how I place a buy order. I am in fact in the lump sum investment camp. I believe there is no long term advantage in DCA and buy as much as I can, as often as I can.