I have mentioned it before in some of my posts, so I wanted to provide a brief explanation of what dollar cost averaging is as it relates to investing. What exactly is dollar cost averaging? Dollar cost averaging is a technique designed to help lessen market risk by systematically purchasing a security or securities on 
predetermined dates and by set increments. The basic idea of dollar cost averaging is trying to provide a support and a hedge against possible changes in the market price of the security.
Dollar cost averaging basically takes the thinking out of the investing process. By this I mean that most investors try to buy when they believe the price of the specific security is low, but when using the dollar cost averaging system they effectively get rid of the thinking altogether because the buy points are predetermined.
Is dollar cost averaging the way to go? I have to be honest, I have some major concerns about a process that simply sets the increments and dates you must buy a stock at. To me, averaging into a stock is very different from specifically dollar cost averaging your way in. When I say averaging into a stock, I mean buy into the stock a little bit, and if it drops continue buying the stock. It doesn't make a lot of sense to me to predetermine that you will buy a certain stock regardless of the change in price over time. If a stock has risen 100% in the past 3 months, does it make sense to buy just as much as you did prior to that runup? I don't think so. No one can specifically spot a bottom in a stock, but being aware of the valuation of a stock is very important.
Dollar cost averaging can be seen as a positive because it encourages investors not to time the market, but I caution investors not to dollar cost average into a stock without thinking about valuation or price fluctuations at all.
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