You use enhanced DCA: $500/month base, +$1,000 when market is down 20%+. The S&P 500 falls 25% from its high. What do you invest this month?

$500 base investment + $1,000 dip bonus (triggered at 20%+ drawdown) = $1,500 total. A 25% drawdown exceeds the 20% threshold, so the extra contribution is activated.

What is enhanced DCA (DCA on dips)?

Standard DCA with extra contributions when the market falls by a set percentage (e.g., +extra when down 10%, 20%, 30%). Pre-commits capital to buy during corrections.

Why is enhanced DCA safer on index funds than individual stocks?

Broad market dips are historically temporary — markets always recovered. Individual stocks can fall permanently (company failure). Enhanced DCA assumes the market will recover, not any single stock.

What is a "dip reserve"?

Cash set aside specifically for extra purchases during market corrections. Must be pre-committed before the dip happens — not raised by panic-selling other positions.

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IntermediateInvesting Strategy

Enhanced DCA: Buying More on Dips

Standard DCA invests the same amount every period. Enhanced DCA adds a "dip rule": invest extra when the market falls by a set percentage. This captures more shares at low prices without requiring perfect timing.

By Jim Liu · Published February 2026

TL;DR

The Basic Enhancement

Normal DCA: invest $500/month, no matter what. Enhanced DCA: invest $500/month + an extra $500 whenever the market (or stock) is down 10%+ from its recent high. This "dip reserve" deploys capital strategically during corrections.

Key Terms:

dip reservecorrection thresholdextra contribution

→Dollar-Cost Averaging →Value Averaging

Enhanced DCA: Buying More on Dips

The Basic Enhancement

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