When the equity and commodity markets get choppy, traders and investors begin to look for strategies to help navigate the chop. One strategy to consider is the 1x2 ratio spread. In some cases the 1x2 allows you to cost average into a position cheaply, and in other cases you can get paid to cost average into a position.The official definition of dollar cost averaging is to allocate a set amount of money to a set asset for a set period of time. For instance, you could buy $500 of XYZ stock every three months. Regardless of where XYZ trades, you buy a set amount. You would purchase more shares if the stock is near its 52-week low, and less stock if it is near its 52-week high (this should be based on a long-term outlook rather than simply adding to a loser because you refuse to admit you are wrong).
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