| Many people buy stocks with the hope that they | | | | varies from person to person. Technical analysis |
| have captured the absolute lowest price and that | | | | can help you catch the stock price near the |
| the price of the stock will go up right after they | | | | bottom, but more often then not, never the |
| have bought it. The emotional part of me hopes | | | | absolute bottom. Therefore, to reiterate, it is |
| that this is the case too when I buy stocks but | | | | essential to buy into any stock slowly, so that |
| the logical part of me knows that it is rather | | | | you still have cash for averaging down. |
| impossible to perfectly time the market. | | | | But what if the price of the stock really goes up |
| Most of the time I buy in whenever there is a | | | | after I have purchased the stock? Doesn't that |
| correction and the price of the stock I have in | | | | mean I have lost out on the opportunity cost that |
| mind has already dropped by a significant amount. | | | | my reserve cash could have made me? Such |
| But more often then not, I am unable to catch | | | | things do happen, but I do not encounter them |
| the perfect bottom and the price of the stock | | | | often. If the price goes up immediately after I |
| sometimes continues to drop further. For this | | | | have purchased the stock, I will just leave the |
| reason, I always keep a significant portion of my | | | | money in my bank and wait for more |
| cash in order to average down on my purchase in | | | | opportunities to acquire more of the stock. |
| such situations. The worst thing that can happen | | | | It is important not to be anxious and re-enter the |
| is that you have already put in all your cash in the | | | | market at a higher price for fear of "missing the |
| initial purchase and end up not having cash to | | | | boat" as this will defeat the entire purpose of |
| average down on your stocks. | | | | buying into the stock slowly. Be patient, and treat |
| It is true that technical analysis, which is the art of | | | | investing as a long term activity so that you will |
| plotting graphs and trend charts to read market | | | | not be concerned about fluctuations in the market |
| movement, can serve as a guide in timing the | | | | on a day to day basis. Only by doing so can you |
| market but it should not be taken as science. I | | | | continuously average down and purchase stocks |
| believe that it should be used merely as a guide | | | | at a low price. |
| because the interpretation of these information | | | | |