Questioning dollar cost averaging
Dollar cost averaging (DCA) is a common hedge implementation strategy used by energy producers, end users and electric and gas utilities. Many companies and regulators believe this to be the most prudent method for establishing a hedge position. Yet there are strong reasons why entities using this approach should question the efficacy of the DCA strategy.
The DCA approach was originally associated with equity market investment practices. If one has $1,000 to invest in a particular stock, DCA
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