Sales Practices: DCA, Market Timing, and Late Trading

What this video covers

• How dollar-cost averaging (DCA) mechanically forces more shares purchased when prices are low and fewer when high, and why average cost is always less than average price
• Why DCA reduces timing risk but does not eliminate market risk, guarantee profit, or protect against loss in a declining market
• The exam distinction between DCA and lump-sum investing, and in which market environment each strategy wins
• Why mutual fund market timing is legal yet highly restricted, and how funds combat it through frequent-trading policies and short-term redemption fees
• Why redemption fees are excluded from the FINRA 8.5% maximum sales charge cap
• What late trading is, why it violates the forward-pricing rule, and how it differs from market timing
• The registered principal's supervisory duty around the 4:00 p.m. Eastern time cutoff to prevent late trading and protect the firm from sanctions