Dollar cost averaging won't work for energy hedging

Long periods of losses make strategy impractical, says energy consultant


The steady rise in the crude price throughout the second half of last year saw the industry’s producers rush to get their hedging strategies in place. But a variety of strategies exist, creating something of a minefield for those looking to optimise risk management procedures. One of the most widely applied methodologies is dollar cost averaging, which is often used either alone or combined with another strategy, but this approach comes with its own problems.

Those who use dollar cost averaging

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