Need feedback on averaging the stocks

[bajajdipesh]

Hi Seniors and friends,

Recently, an idea is popping up in my mind. The idea is to select some stocks at say X Rs. and then sell it at 1.33 X, basically 33% profit or if it goes downside then buy it at 0.75X, basically 75% of previous buy price. If it goes further down then again buy at 0.75*0.75*X price and keep the selling price as 1.33 of this price.

I have observed every stocks makes yearly high and low and we can capture this high and low by this method. Of course this method is not suitable for traders but how is it from investment perspective.

I know averaging is not a good thing to do and we should always put stop loss but somehow I am not able to come out of mental barrier of selling stocks in loss.

Please give your suggestion on the above theory in long term perspective. Thanks.

 

[moulinath]

the message has posted two times by mistake

 

[moulinath]

:thumb:averaging stock is a very old practice. the father if value investing bengamin graham advice dollar cast averaging in his famous book 'the intelligent investor'. it is a good idea, however the strategy should be applied very carefully. when you trade a particular stock it is not a good idea. the averaging strategy is applicable only when one is investing and with a long horizon. there should be a clear difference between trading and investing. if anyone follow the averaging strategy while trading he would do a cardinal mistake and will lose significantly. the averaging strategy should be particularly applicable when markets have fallen drastically for example a 40% drop in nifty. one should also keep in mind that averaging should be done with spectacular stocks. i average only the frontline stocks in which i have fullest confidence. this strategy gave me good result. if applied properly one can make substantial money with it. thank you.:thumb:

 

[desifxtrader]

Hi Seniors and friends,

Recently, an idea is popping up in my mind. The idea is to select some stocks at say X Rs. and then sell it at 1.33 X, basically 33% profit or if it goes downside then buy it at 0.75X, basically 75% of previous buy price. If it goes further down then again buy at 0.75*0.75*X price and keep the selling price as 1.33 of this price.

I have observed every stocks makes yearly high and low and we can capture this high and low by this method. Of course this method is not suitable for traders but how is it from investment perspective.

I know averaging is not a good thing to do and we should always put stop loss but somehow I am not able to come out of mental barrier of selling stocks in loss.

Please give your suggestion on the above theory in long term perspective. Thanks.

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