I am the believer and some might say inventor of the strategy,”You must always stay in cash. Start buying at 5% decline from its recent highs and keep averaging at further 3% declines. Start selling at 5% up and keep selling at every 100 points upward movement to move back in cash.”
Walking the talk, I started buying at 8170 and kept averaging at 7925 and 7790. The law of averages say that you have to double the quantity at every average. So I bought the most at 7690. You might ask that the NIFTY did not close at 7690 that day, so how did I buy.
As explained in the earlier posts, I use a software that uploads the file with buying ranges and as the script or Index falls to a certain price, it prompts to buy. It touched 7690 in the intraday.
As on today even after the market carnage, I am sitting on a tiny profit.
This sitting out strategy waiting for index to fall has served me well. You have the freedom to do your own thing, hooking up with old friends, going to Gym, leisurely stroll through the malls.
But when you think about it realistically, sitting out of the market for more than a few weeks doesn’t sound like so much fun. It starts taking a significant toll on physical and mental well-being. Unfortunately stock market is my only object of desire at the moment and there is nothing else to keep me occupied.
Over time, I become lethargic, less friendly, less hard-working, and less open to new experiences. And I have become less agreeable to surroundings. I fight more often with my wife and friends. And tendency to be orderly and motivated also decreases.
To come around this situation, I started spending more time on my Facebook and my new blog where I share my experiences. I read all financial articles, books. Occasionally I play Intraday and RSI with tiny amounts.
Challenge for me is no longer earning money from stock market, it is how to stay motivated, active and friendly. I am the living proof of the fact that it is much more difficult to wait for something to happen than making loads of money.