Dollar Cost Averaging Strategy Now Supported on BackAlpha

Published May 23, 2025

We're excited to announce support for the Dollar Cost Averaging (DCA) strategy on BackAlpha. Starting today, you can explore how consistent, recurring investments would have performed across decades of historical market data.

What is Dollar Cost Averaging?

Dollar Cost Averaging is a time-tested approach where an investor allocates a fixed amount (e.g., $1,000) at regular intervals — typically monthly — regardless of market conditions. This strategy helps reduce the emotional swings of trying to time the market and smooths out the effects of short-term volatility.

Backtesting DCA on BackAlpha

With our DCA simulation, you can see how regularly investing a fixed amount each month would have grown over time. The simulation assumes $1,000 is invested on the first eligible trading day of each month.

For each DCA backtest, we show:

• Total amount invested across the simulation period
• Final portfolio value based on cumulative shares and final price
• Total gain and internal rate of return (XIRR) — a realistic measure of annualized return based on cash flow timing
• Detailed purchase breakdown with price, investment, and value at each buy

Choose from Multiple Time Horizons

You can run DCA simulations over 3, 5, 10, 15, 20, or 30 years — or even across the full historical dataset. This lets you compare how the strategy performed across bull markets, corrections, and recoveries.

Start exploring Dollar Cost Averaging now by visiting the DCA strategy page. Whether you're testing SPY, QQQ, or any other ticker, BackAlpha makes it easy to visualize long-term outcomes.