Forex trading business – In other words, when prices fall, the $1,000 buys a larger number of shares; when prices rise, the $1,000 will buy a smaller number of shares.

Thus, investors buy more advantageously when prices are low, or at any rate lower, and are less tempted to sell when stocks are depressed. The temptation to buy when prices are high is kept in check by the use of only a fixed amount of money. The result of purchases over several years, and certainly over a longer term, will be an investment made at weighted average prices, a larger number of shares having been bought at low rather than high prices. Experience and studies show that as a rule, a rigid policy of dollar averaging in a representative standard stock would work out well. A dollar averaging plan started in 1929, when the combined index of Standard and Poor’s five hundred stocks stood at $26.02 per share (1941-1943 = 10), and implemented by annual commitments of $1,000 annually would have resulted in the following: If continued through 1958, the investor would have had 2,010 shares with a market value at 1959 prices of $57.

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[tags]Forex Currency Trading[/tags]