How DCA works
You commit a fixed amount at a fixed interval — say ₹5,000 every week — and buy whatever that gets you at the time. When price is low you accumulate more units; when it's high you get fewer.
The result is an average cost that smooths out the highs and lows, and a process that removes the emotional decision of 'is now the right time?' from every single buy.
The maths of averaging in
Say you invest ₹5,000 across four weeks at prices of ₹100, ₹80, ₹125 and ₹95. You buy 50, 62.5, 40 and ~52.6 units — about 205 units for ₹20,000, an average cost near ₹97.5, below the simple price average because you bought more when it was cheap.
DCA does not guarantee a profit and it won't beat a perfectly timed lump sum. What it reliably does is reduce the impact of buying everything at one unlucky price.
When DCA helps and when it doesn't
DCA shines for long-horizon accumulation in volatile assets, and for anyone who knows they'll otherwise try (and fail) to time entries.
In a steady, sustained uptrend, a lump sum often wins because you're in earlier. And DCA is only an entry tactic — it says nothing about when to take profit. Pair it with an exit plan and position-size rules so accumulation doesn't quietly become overexposure.