Today, I would like to share one interesting idea which can be used to make money from stock market. With this idea one can make handsome amount of money through Stock Market. Stock Market is full of opportunities to make money in bull phase and even bear run.
OK… let me discuss my idea in detail.
If you have observed, the stock prices of reputed blue chip companies listed in the Stock Market never move only in one direction for a longer time. If they are going down and down, there will definitely be the time when they will bounce back. But the only problem is that in most of the cases we don’t know what will exactly be the bottom. And of course if someone can know that he will obviously be the millionaire!!! OK doesn’t matter, even if we cannot predict the exact bottom of the stock price of the particular scrip, and this idea will help to make money even with this!!!!
OK!!! Let me not stretch your curiosity. The idea is quite simple. Just choose one reputed blue-chip company listed and part of some reputed equity index like Sensex or Nifty. Now… before you start to invest money into the stock of this company, simply observe the price movements in the stock price of the company, check the history of the price movements of this stock for last five years, and make some judgement about the bottom price of the company.
Now be little patient, and wait for the fall in the price of this company. As and when you are convinced, that the price is near to bottom, buy some shares of this company. If the stock price moves up considerably after you invest, then it’s very simple, just sell shares and take away profit. If the price moves down around 10% to 15% from your purchase price, (If stock price is down but not as down as 10% to 15%, then simply wait and watch) simply buy again, this time DOUBLE the number of shares which you purchased before!!! Yes!! You got it!!!
Now!!! If the stock price moves up from your second time purchase price and if it is considerably above that price, but still less than the purchase price of your first purchase, then simply sell the stake which you purchased second time and book the profit, and now you will have only the shares purchased first time with you. Again wait and watch, and if again there is upward swing and if price rises even above your first time purchase price, then simply sell it and make profit!!!!
Wait!!! But, this will always not be as simple as this, suppose if, the stock price drops down 10% to 15% even below your second purchase oh!! Now here you will have to have faith on the reputation of this company, and this time you will buy more shares of the same company AGAIN DOUBLE THE NUMBER WHICH YOU PURCHASED SECOND TIME!!
Yes!! Now you exactly got what I am trying to convey. You will have to be sure yourself how much dips in the stock price you can afford. I am sure this idea will work for you if you have courage and faith on the company, the stock of which you are investing!!
Following are some extremely important points to be remembered while applying this idea. This article about Stock Market can not be complete without these points.
The company which you are investing in MUST be extremely reputed blue-chip company. The market capitalization of the company should be considerably high, and the turnover must also be high. Also ensure that, there is some investment of some reputed Mutual Funds in stock of that company. Check the financials of the company, the future plans of the company and business model and industry of the company.
At the time of first purchase only, have your plan ready, how many dips in the price you can purchase more shares every time.
Ensure that while all this time there is no any serious bad news or any adverse business conditions, about the company, the impact of which can be for longer time. If that is the case, you will have to stop the investing more in the company. Always at every dip in price when you will purchase the shares, ensure that price drop in stock price is due to general market sentiments and not due to any specific bad news about the company.
It is always be better to have the experience and background of investing in stock market before applying this idea.
You can choose 2 to 3 extremely reputed blue-chip companies and apply this idea.
There are always extremely innovative ideas to make money, and probably this is one of this.