How Linear Price Growth Powers Accurate DCA Results
The DCA Simulator relies on a clean linear price growth model to deliver consistent and transparent Dollar-Cost Averaging projections. Unlike volatile real-world data, this deterministic approach lets users focus on strategy mechanics without noise from historical fluctuations.
The Core Formula
For each period, the asset price is calculated as: current price equals initial price multiplied by one plus the growth factor. The growth factor is the annual growth rate divided by one hundred, multiplied by the current period number divided by periods per year (fifty-two for weekly, twelve for monthly). This prorates the annual return evenly across intervals.
Step-by-Step Calculation
- Determine periods per year based on frequency
- Loop from period one to the total number of periods
- Compute prorated growth for that period
- Derive current price from initial price
- Calculate units bought as fixed amount divided by current price
- Accumulate total invested and total units
Final Metrics
After the loop completes, average cost is total invested divided by total units. The final price uses the full prorated growth over all periods. Portfolio value is then total units multiplied by final price. This yields exact, reproducible results every time.
Real-World Example Validation
Consider a classic weekly plan: one hundred dollars invested weekly for fifty-two weeks, starting at ten dollars with five percent annual growth. The simulator produces exactly five thousand two hundred dollars invested, five hundred seven point one seven nine seven units acquired, ten point two five dollars average cost, ten point five zero dollars final price, and five thousand three hundred twenty-five point three nine dollars final value. These numbers align perfectly with manual spreadsheet verification of the linear model.
Advantages of Linear Modeling
Linear growth provides educational clarity—users see exactly how rising prices affect units bought per period and overall average cost. It avoids randomness, making it ideal for comparing different investment amounts, frequencies, or growth assumptions side-by-side via shared URLs.
FAQ
Why not use compound growth?
Linear keeps calculations simple and transparent while still demonstrating DCA benefits in trending markets.
Can negative growth be simulated?
Yes—enter a negative annual rate to model declining prices and observe increased units per buy.
How precise are the results?
Calculations use full floating-point precision with rounding only for display (two decimals for prices, four for units).
Master the math behind your DCA strategy with predictable, verifiable outcomes.