Knowing when to enter an equity when the price is falling
Observe, at the 40.96 level, the uptrend method has zero dollars at risk. It is wating for an uptrend move before dollars are put at risk.
Also this is an automatic cash(saving )burn method.
This subject is a well known investment issue and has been discussed here frequently. In this context I like to quote something that, as far as I remember it correctly, is also what Lichello has stated in his book.
"The Biggest Mistake an investor can make is not to be in the Stock Market"
This refers specifically to the stock market fact that prices are always bobbing up & down. . .
Prices will rise
or
Prices will remain the same
or
Prices will drop
That are the three certainties that AIM is based on. For the rest you be advised to learn as much about the equity you are interested in. . . such time investment is worth the time!
It is obvious that when an equity is diving that this is a warning for anyone and that you better keep your money in an equity who's price is cycling or is rising.
For that reason various Moving Average Schemes are invented, among which the MACRO-Filter from Don Carlson many years ago was invented for specifically not stepping into an equity that had shown no reversal signs. The problem always remains, of course, that after a short price recovery. . .for example after temporary lack of bad news. . . the stock price goes to zero and then stays there. . then you are still out of the money!
A qoute from my book:
"If you desire to invest effectively then there are two choices open to you. You either make predicting the future your goal or you resign to use an investment technique that will work with the simple fact that stock prices will rise and fall periodically. The simple technique is nothing more than using the age-old wisdom
Buy Low…..Sell High"
