In the beginning of Feb, our local market show some small correction, this create many opportunities. I do share the a topic at my blog:
Buy when stock price up or when stock price down? (remember, the choice is yours if you not agree with my point)
My view, it's very dangerous to average down (buy when it continue to go down). The best is buy when the price start to go up after the share price find the bottom. But how to do that?
Today, I am going to share with you how I do this. For those who are interested, register an ID in Stock Games at CIMB web site:
Select Tools --> Stock Games
Many will ask, why play Stock Games? This is my secret weapon where it help me to Buy Low and Sell High.
Let say you plan to buy a X stock at $2.80, so when first day down it hit 2.80, sign on Stock Game and buy @ $2.80 for 1000 share. Use Stock Game to "average down", the more it down, the more you buy. So, when you buy it with real money? I will keep on buying with Stock Game until one day if I notice the X stock start to move higher 7% from my lowest buying record.
Let's assume X stock move all the way down in few days:
$2.80 ----> Stock Game buy
$2.58 ----> next day, use Stock Game buy again
$2.39 ----> buy with Stock Game
$2.22 ----> buy again with Stock Game
$2.25 ----> Buy with Stock Game, the stock price rise a bit, but no action, as it rise less than 7% from previous buy point
$2.01 ---> Buy again with Stock Game
$2.21 ---> Buy with Stock Game & REAL MONEY
We use the Stock Game to buy with Cost Averaging Down Method (never use this method with Real Money, as you might end up losing all without cut loss) and buy with Real Money at $2.21, although we can not buy at the lowest, but it's more safe to start accumulate when stock start the up trend again. So you can now decide how many shares you want to buy with Real money and continue to add even the price move up to $2.30 or $2.40. (you need to add fast, as many experience trader always act fast) I think it's more cheaper if you buy at first down of $2.80.
You can do the same when stock move up very high at time when you want to sell.
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