Hello friends hope your investment is running well with good return ,I can’t say that you are getting good return or not but keep your investment for long term target with open mind.
Today we will discuss about averaging in stock market,I recommend 1-2 years of practice in gaining knowledge and to get an idea about shares before making entry into stock markets till you can invest using mutual fund SIP and if you want to make practice in stock market then read Top 10 Trading rules.
Do not be over confident in stock market it’s game of money and per second value is important.
Remember that Before you attempt to beat the odds, be sure you could survive the odds beating you.
Before discuss on make averaging in stock below are our best article related to stock.
What is stock average:
Stock average is work according to mutual fund SIP, It is not similar with SIP, but it means that you are adding more stock quantity in your portfolio.
Stock average will increase / decrease stock quantity and overall investment price.It is good if price will decrease but all decision is depend on current market and related to the stock.
How stock averaging become in profit:
Suppose you buy 10 X-Company Stock with price Rs 100.Total investment is 1000, now if market down and X-Company trading at Rs 75 Level, here if you sell all the stock then you are in loss so you can do two things then Just hold the stock wait for target price and sell it in near future.
Second option is make average now suppose you buy 20 X-Company stock again with price Rs 75, total invest is Rs 1500.
Overall 30 stock of X-Company you have with average price 2500. So per stock price for you is 2500/30=Rs. 83.33.
For booking profit you can sell it after it reach 85+ Level.Advantage of stock averaging will convert in good result if we invest for long term with good return company.
If stock is not trading at bottom level then averaging stock is not good.However, if the stock continues falling, you have to decide to keep averaging down all is your decision but make such type of decision after lot of reading and discussing about the company profile.If you truly believe in the company, averaging down may make sense if you want to increase your holdings in the company. Accumulating more stock at a lower price makes sense if you plan to hold it for a long period.
Friends,Swimming against the current can sometimes prove profitable, but it can also get you swept over the waterfall.
If you’re playing stocks, averaging down probably doesn’t make any sense. Take a small loss before it becomes a big loss and move on to the next trade.
If you invest in companies, averaging down may make sense if you want to accumulate more shares and are convinced the company is fundamentally sound.
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Important Advice:If you can accept failures, control your egos, work hard – you will definitely make money over long term.
