Stock Investing: Martingale Strategy or Dollar-Cost-Averaging?
To some people, stock investing is just like gambling. Buy low, sell high. However, it is almost impossible to predict the market.
Fortunately, if we assume that no matter how much does the stock price falls, it will always increase ‘someday’, martingale strategy can also help you to guarantee profits.
Based on the illustration below, supposed we start to buy 1 unit of stock at the price of 10, if the price increases to 11, we sell it and make a profit of 1.
However, if the price falls to 9, we can actually buy another 2 units, such that when the price increase to 10, we sell them and make a profit of 2.
If the price falls again to 8, we buy another 3 units, such that when the price increase to 9, we sell them and make a profit of 3.
And so on…
Practicing this strategy will require you to have sufficient buying power, as well as the correct judgement on the choice of stock. In short, choose one stock that you believe that it will grow someday, and invest within your means. Invest safe.
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