Source
r/UKInvesting•
maxistaxis

Catching an Uptrend and Avoiding a Fall

I am sure that I am not the only one that gets super peeved when a share goes up 15%, then gives back 10% on a few mini sell-off days + MMer marks them down. So the last few days, pretty much sucked for quite a few PIs. Strong rises in stocks the week before + early in the week, only for a partial reverse in many stocks later on the week.

During the weekend, I was intrigued whether the following scenario could play out - assume that the spreads are not so wide, suppose you r up 15% on a stock that you believbe will multi-bag for u, but short term, there could be some down days (after it is initially up), and you kind of see a mini sell-off going on - e.g. FTSE 250 in the red by say 0.95%, what is wrong with - running off with the profits, in the hope that the SP will fall further after you have sold off, and then whack in your previous capital + winnings again into the SP, when you feel that the market is more bullish. I know it is hard to time th emarket. Sometimes, it's obvious that the stock has got too far ahead of itself, e.g. I held SAGA, it rockets up to 340-345p too quick IMO, and gave alot way standing around 263p on Fri even.

Any views?

Posted Nov 30, 2020, 12:12 AM UTC

08
audigex•

If you're "peeved" then you're investing on emotion, and trying to time the market

Both of those things are good ways to lose money.

The best tip to avoid this: Stop checking the price. Unless you're day trading (and based on your post, you shouldn't be) then it's irrelevant because you're investing over the next 1-10 years.

Pick your timeframe, invest, then forget it until it's time to make a new investment or re-evaluate in a minimum of a few months time

7
maxistaxisOP•

Cheers - good point u made - I think i need to think in terms of my time horizon

2
tmas34•

With this approach, you will be beaten every time by algo traders with monster leverage.

4
maxistaxisOP•

mm,,good point cheers

1
jpcup•

Time in the market > timing the market

I learned this the hard way unfortunately

2
maxistaxisOP•

Thanks for reply. I know that is the general consensus. I'm sure I am not the only one to get peeved when initially u have a target of say 100% return (Ive been focused on turnaround or covid-hit stocks recently) - and they retract by x% - and u think to yourself in hindsight - I could have banked that profit and then shove in capital + profit again at a lower price - oh well - dream on!!!! cheers

2
ChemicalPhilosophy•

Decide in advance what you want to do and stick to your plan.

For example you have £10K in a stock, and the plan is when it reaches 12K you sell 2K. If it goes down you buy back more so you have more shares for the same original investment. If it continues to go up you still have 10K invested (but at the new price).

If it only goes up to 11K before dropping again, then you do nothing and don't feel frustrated because you are sticking to your plan.

The only time I feel frustrated is when I don't buy enough of a stock because I'm scared it will go down before it goes up, but it doesn't go down far enough and then shoots up.

1
maxistaxisOP•

Thanks for reply. For me, it's much easier for stocks that I can expect a 15-20% increase and buy in and it achieves this and voila - I sell out - no problems with these.

I find it much harder when I am aiming for 100% return - Ive been focusing on turnaround / covid-hit stocks . e.g. saga ; pmg ; apf ; rbg ; etc and when they got to a certain level of SP rise (i.e. so in my specific cases that I am thinking of - I am in profit) , sellers sell out, and the SP retracts, and u cant help think - man if i could sell out at a high SP and then buy back in again at a lower SP with your initial capital + profits (u made upon exit) . Cheers for food for thought

1