Trading stock techniques that are often used by traders, one of which is averaging up and averaging down. If you don't understand about both, please read the post: Averaging Down and Averaging Up Stocks. However, in this post I will not discuss the technique of playing stock by averaging down, because I have already discussed it in this post: Which is OK: Averaging Up or Averaging Down?
Averaging up is a truer stock buying technique than averaging down. Then what is the right stock playing technique using averaging up?
As far as my experience is in stock trading, the right averaging up technique is when the stock price is still / is cheap (low), and the stock price is in a steady uptrend / the stock price is showing signs of going up high.
"Brother Heze why should you do averaging up when the stock price is still low?" Ask you
First, if the stock price is still low / cheap and supported by uptrend conditions, the potential for the stock price to rise will be even higher. You see PPRO. When PPRO's share price was still in the 230's, PPRO was able to continue to rise to 1,400's, then after the stock price was high, PPRO was difficult to rise again.
Second, if you are averaging up when the stock price is high, the capital you use is getting bigger, and it will be more difficult for you to sell the shares at a high price, because the higher the averaging up value, you need a bigger price increase in order to sell and earn money. compared to if you are averaging up when the stock price is still low.
"Ohh okay I got it" you mumble.
One thing you need to know, if the stock price is fluctuating or even tends to fall, don't try to averaging up. This can trap you. Averaging up when stock prices fluctuate or tend to fall has the potential to make more and more of your funds stuck.
"But Bung Heze.. there's one more thing that's interesting. If the stock price is in an uptrend and I'm sure it's going up, why do you have to averaging up everything, just buy a lot." next: The Right Technique for Averaging Up - Part II.
