is it Better to Purchase All @ One Time or Space Out the Purchase?

[somasekar]

I would like to know from experts, is it good to purchase a particular stock all at one shot when they come down or purchase the stocks in parts.

I mean, Suppose If I want to invest 10000 USD. Should I purchase particular company stock all at once?

Or Purchase for 5000 USD and wait and observe for couple of days and if it goes down buy remaining?

 

[The Leopard]

I would like to know from experts, is it good to purchase a particular stock all at one shot when they come down or purchase the stocks in parts.

I mean, Suppose If I want to invest 10000 USD. Should I purchase particular company stock all at once?

Or Purchase for 5000 USD and wait and observe for couple of days and if it goes down buy remaining?

There is no answer to this, it depends on many things. Both are viable.

What matters more is that you have an approach that you have demonstrated to your satisfaction works, and applying that approach consistently.

You might want to look at How To Trade In Stocks, which discusses scaling in. Although he was in favour of buying more as it went in his favour rather than against him.

That is not to say that that way is right and others are wrong of course. There can be no right answer (unless perhaps liquidity prevents one from establishing one's entire position in a single go).

 

[somasekar]

Thanks Leopard.

Yes I agree. As the price might go up or down when we are waiting for couple of days.

I will check the book mentioned as well.

 

[Jason Rogers]

I would like to know from experts, is it good to purchase a particular stock all at one shot when they come down or purchase the stocks in parts.

I mean, Suppose If I want to invest 10000 USD. Should I purchase particular company stock all at once?

Or Purchase for 5000 USD and wait and observe for couple of days and if it goes down buy remaining?

Hi Somasekar,

I agree with the Leopard that either method could work depending on the reasoning behind it. Personally, I like scaling into positions because with stocks I take a buy and hold approach. If a stock I like goes down, but I believe the fundamentals of the company are strong, I see it as an opportunity to buy more shares at a discount. The important thing is I have already planned the price levels I'm willing to buy at BEFORE I place my first order.

And I also have a price level in mind that if reached would tell me to abandon the trade. If you intend to buy some stock around Support Level 1, then some more at Support Level 2 and 3, then that's fine. Where buying at multiple prices can become a problem, is if you're only doing it after the fact to try to turn a losing trade into a winner by doubling down.

I notice you live in the US, if the idea scaling into a trade with multiple entry points interests you, you might want to look into some of the big banks that offer commission free trading if you maintain a sufficient balance with them in a checking or savings account. That can greatly increase your flexibility to scale into a stock position with several entry points.

Best of luck!

Jason

 

[metalman73]

While I'm a newb to this forum and researching trading online, I've actually been goofing around with stocks for several years. I have one company where I buy a massive amount of stock, but I find selling in smaller portions to be wiser. I'm fully aware that I'm probably breaking lots of trader rules, but its my system, and it works for me.

This stock can have large swings within a day compared to many other companies. Usually there's a huge dip in the first 20-30 minutes, and come back or it can drift down to around lunch time, then repeak about 1-2pm. These two patterns are common on regular days. I've had days where it went up or down for no apparent reason. And of course it's crazy on days where there are big announcements.

Something to note is that the market capital for this stock is Billions, with the daily volume in the millions. So the 6000 shares I buy or sell only change the price $.10 or so. It's not uncommon to see trades of 30k or 40k shares in the volume bar.

When I buy in those dips, I already know I'm getting a discount so I'm not to worried about price. When I sell in big numbers the price will drop enough so my loss is more than the cost of the trade. Selling in small numbers only drops the price a little, and enough to validate the cost of that individual trade.

I think the key to your question is what is the market capital of that stock vs. your purchase? And how many shares are you buying compared to the daily share volume?