what about buying mutual fund shares before 4 PM each day the DOW is down at least 15 points? Buying in consistently at the lowest possible points in a predictably long-term rising market seems a good idea.....
2006-12-18 06:06:27 · 8 answers · asked by itsyouandmebb 2 in Business & Finance ➔ Investing
Most of the time you can only buy mutual funds at the end of the day.
If they are exchange traded, then you have a chance, but it is impossible to time the market. Don't try it, it doesn't work
2006-12-18 08:10:37 · answer #1 · answered by NYC_Since_the_90s 6 · 0⤊ 0⤋
In a long term rising market, that would seem to make sense. Unfortunately, the market's ability to stay down usually can and will outlast your ability to continue to contribute to the market each and every day the market is down at least 15 points.
Further, because you talk about mutual funds, you're really tying your hands as they are not very liquid and are loaded with fees (even the no load ones) if you try to sell "too soon"
If you're set on this strategy, you do need to do (at least) two things. One, use an ETF (Exchange traded fund) like QQQQ, DIA, or SPX instead of a mutual fund. Two, you should use what's called a triple screen method.
The triple screen will help you from just jumping in arbitrarily on down days. It'll keep you right more times than not. The triple screen (see Alexander Elder's Trading for a Living) essentially has you following a WEEKLY uptrend, and having you buy after daily downtrend (hence your down days), but you buy when the price is above the previous day's high.
So, if you're buying DIA, and it was 122, then 121, then 120.50, then 120, you wouldn't buy each day it goes down. You'd wait until the down days are done and the price goes above the high of the prior day. This still gets you in on a "down/dip", but you won't ride the dip down as sometimes the indexes, etc, can continue down for several days.
Does that make sense?
No matter what, please backtest any strategy you plan to use. Your best chance for success in in preparation and knowing that you have a good system with a positive expectancy.
Best of luck!
2006-12-20 17:02:37 · answer #2 · answered by Yada Yada Yada 7 · 0⤊ 0⤋
The sooner you can get your money invested, the better off you'll be. If you've got cash, don't wait around for the market to fall.
Let's say on Monday the Dow is at 12,000 (you're waiting for a decline of 15 pts)
Tuesday it increases by 100 pts to 12,100.
Wednesday it increases again to 12,300.
Thursday it falls by 20 points and you invest when at Dow 12,280 (this is higher than what you could have investe at on Monday).
Since the market moves up about 65% of the time, you're better off getting your money invested sooner and not waiting around for the Dow to decline.
2006-12-18 15:27:22 · answer #3 · answered by derek 4 · 1⤊ 0⤋
Won't work. You can't get your 'cash' to the broker in time to make today's trade. Even if you have a money market with the same company, they won't redeem the MM until after the close, and won't make the purchase until after the close on the next business day.
2006-12-18 17:54:53 · answer #4 · answered by knihelpu 4 · 0⤊ 0⤋
That might be a good approach sometimes if the rising market trend continues. However, there are often fees for early redemptions in case you decide to take your profits or cut your losses.
http://wwwtaxman.blogspot
2006-12-18 14:13:56 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Do you mean trading against trend?
Bill Williams clearly described it in his book Trading Chaos II
2006-12-18 16:19:24 · answer #6 · answered by VP 3 · 0⤊ 0⤋
Ah, the dream of all investors!! Buy low and sell high!! You could make millions!!!
2006-12-18 14:35:21 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Well, first you have to consider the facts.
2006-12-18 14:08:50 · answer #8 · answered by N T 2 · 0⤊ 1⤋