How do I dollar cost average into stocks for long term?

SimpleMeLike

SimpleMeLike

Hello,

I would like to buy 3 stocks I did some research on, that I think will have a good long term investment return in about +5 years.

I do not know have experience (even though I practice and studying day trading) timing the market month to month and do not know when a bottom will come on the S&P 500 index or the stocks. But I know prices are low.

For example, if I have $30K. I am thinking of doing the following.

1. Split the $30K into 3 ($10K per stock investment)
2. Stock A ---> $10K. Split the $10K. Invest $5K on Monday. If prices in stock A fall again between 5-10%, invest the other $5K. If prices in stock A go up 5-10% invest the other $5K.
3. Repeat the step 2 for Stock B.

I appreciate your thoughts if anyone else is trying to buy stocks at low prices.

I have thought of just pulling up a monthly/weekly chart of each stock I want to buy seeking some support levels and buying there and calling it a day and just hold long term.

As I type this I might just do that. Put my price action skills to test. lol

Thanks,
 
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In this day and age, any given stock can drop 5%-10% in one day. I suggest you wait until the market turns around and you know that everyone else knows that the market turned around.
 
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schizo said:
I suggest you wait until the market turns around and you know that everyone else knows that the market turned around.
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Thanks schizo,

That is the problem, noone knows when the market will turn around. I have thought of just pulling up a monthly chart seeking some support levels and buying there and calling it a day and just hold long term.

As I type this I might just do that. Put my price action skills to test. lol
 
SimpleMeLike said:
Thanks schizo,

That is the problem, noone knows when the market will turn around. I have thought of just pulling up a monthly chart seeking some support levels and buying there and calling it a day and just hold long term.

As I type this I might just do that. Put my price action skills to test. lol
More...
First, sorry for having gone off-topic and not addressing your question. But no matter how good the Dollar Cost Averaging is, you would only be pouring money down the drain if the market keeps going down. Hence, it would be safer and better to get in not at the bottom but, say, at the middle of the trend (you know, when everyone piles in knowing that the trend has reversed?)

Hope that helps.
 
You could also pick other companies in the same sector. Instead of buying the same stock that is up 5-10%, but another that looks good but maybe didn't move up as much.
Eg, if you're already in Coke, buy Pepsi later
 
https://awealthofcommonsense.com/2020/03/what-if-you-buy-stocks-too-early-during-a-market-crash/

For the record, during the financial crisis of 2008, I was averaging down and was fully invested when SPY hit 800. Then I watched as it went down to 666. One of my holdings was Lehman Brothers. I knew nothing about trading at the time, just general investing principles.

Questions you need to ask yourself - will you pull the trigger on the way up or will your mind be anchored to the lows? Will your "trading knowledge" help or hurt you as an investor?

BTW, as dumb as it may be, I don't scale in by any price/value related indicators. I scale in on negative sentiment flushes.
 
EDIT: I don't long term invest only trade, so even though I believe and have solid reasoning's for the case made, I do not want to influence you on something I don't actually do live with my own money. Where as trading I don't mind doing that as much, because I am actually in the trenches everyday with live money. So, decided to edit out my comment.
 
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