I have always rushed to buy when the market corrects. To my good fortune market has always bounced back. I understand the fact when the market bounces back, the first couple of days the traders who have done bottom picking see a profit of 5% and bail out and sit in cash. That causes the market to push down a bit creating fears in the market that aftershocks are coming and there will be further sell offs.
I too bailed out seeing a profit of 6% in 4 days. But this time, I bought back in on Friday hoping the rally is not over. Market is going to further rally from this point. I have also decided to buy in to any further declines if they happen from here onwards.
What can happen from here?
1. Market rallies and I earn a windfall.
2. Market doesn’t rally and it goes to in to a negative zone prompting me to put more money in the market. I keep waiting for a bounce back that doesn’t happen.
If the former happens, does that make me the master of this universe. Hardly. Market is smarter than me. She is the boss. I just need to be smarter than the 5th grader and it will still keep me ahead of 95% of the traders.
If the latter happens, I hope to cut my losses by selling all and further hope to stage a come back to fight another battle, trading another day.
Either way I am not going to leave this market as it is slowly turning in to my only weekday toy to play with. I am hooked.