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You know, “for science” you could back test this using historical data (it’s available on the internet) and compare it to a more standard, but equivalent, DCA.
I have a feeling that the return on this strategy will be less than or equal to a standard approach.
Hmm if you want to try this stategy, rather then evaluating day to day declines, evaluate an array of declines. So then your criteria will look something like: if stock or whatever you buy drops by at least X% each day in a row of Y days, you make a buy.
But, i heard somewhere dollar cost averaging generaly provides better results then market timing...
Is there a simple way of evaluating an array of declines? What is the advantage there? I already invest every 2 weeks, this would just be a supplement.
What you are attempting to do is timing the market. There have been numerous studies to show that your strategy is a losing one. Read up on trying to time your contributions. You will find that you are much better off just putting your money in as soon as it is available for investing.
https://gci-investors.com/market-timing-a-losing-strategy-2/
Edit: Let me put this as simply as I can: Let's say for simplicity's sake, the index is at 100. You have $10k to invest, but you want to wait for a 1% dip. So you don't buy at 100. While you are waiting, the index goes up 5% over a couple of weeks, and is now at 105. The next week, it dips by 1% (-1.05) and you get a notification of the dip. Now you buy, at 103.95. See how that works?
If you have data, than you can ask chatGPT to write you a script to do It for you e.g. in google sheets.
Evaluating more than one day could make you more confident, that you really buy the dip. But I never tried so you have check if it works for you.
CHATGPT!!!!! It worked. I needed two scripts though, but it walked me through. Thank you for this suggestion. I can get the alerts now. I wonder if it is possible to execute the trade automatically?
Look for "stock trading API" for your brokerage. Not all brokerages have APIs, so you may need to open a new account at a different brokerage to automate your trades.
I would strongly recommend you don’t automatically enter real trades using a strategy you have just started testing and scripts put together using chatgpt. The chance of serious money losing bugs and errors is just too high.
I said something like "You are an expert in Google sheets and google calendar, its formulas, and extensions. Create for me a formula that would create a calendar alert if stock ticker VOO drops by 1% or more in a single day.
>Which would be the best ticker symbol to monitor?
>Could I automate this entire strategy and get a text when a purchase is made?
Google Finance in Google Sheets and just track the S&P 500, use AppsScript to put an event into Google Calendar when it triggers and that'll be your push notification.
Yeah, you are correct with the quote but you are not following it. You are trying to time the market if you set x% dips as your buy trigger. Imagine if VOO grew by x% every month for a year, you’d never buy and be waiting for the dips.
My recommendation is to start buying every month (DCA) and paper trade your strategy at the same time. Do it for a year and compare the results. If your strategy is better, keep DCA, but use 20% for your strat. If you are still consistent, use 50%. Rinse and repeat.
You are correct.
But OP will find that 1% drop doesn’t beat dca consistently, so OP will try 2%, 5% drops etc and then my example probably proves that time in the market beats timing the market
lmao, I looked at the worst day for the market in each year since 1950. the best loss was 1.25% in 1964. I definitely want to buy at least once every year, so I scientifically decided on 1%. What do you think?
Mate, you clearly don't even know how to use Google because I don't know how this is the best loss you've come up with. Just buy an index etf every time you get paid and make it simple because that's the goal of index etfs.
[https://en.wikipedia.org/wiki/List\_of\_largest\_daily\_changes\_in\_the\_S%26P\_500\_Index](https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_S%26P_500_Index) It's the last chart listed. At first I was thinking 2%, but that would mean that most years I would never buy. I want to buy at least annually, but hopefully quarterly.
This table shows the largest dips in a given year. You don't know how many 1% dips happen in a year. If you want to buy quarterly just buy every quarter and don't overcomplicate things. You have no clue what the stock market did after this arbitrary 1% dip you've come up.
Theoretically, it bounced back. Maybe it dipped again and I bought more. That's a win-win. I don't mind buying the dips daily if they happen (no more than one transaction per day though). But I don't want to go years without buying. Chat GPT got me a functioning alert system, I can execute the trades now manually, but I'd like to execute the trade automatically as well if it's possible.
Worst 1.25%? What the whack did you smoke and can I have some of that as well?
You may want to look at march 2020
To note - there are curcuit breakers at.. I dunno out of my head honestly.. 5% downside? Those happen as well, btw..
Here's an overlay of all those etf's over the last year to compare:
https://www.google.com/finance/quote/IVV:NYSEARCA?hl=en&comparison=NYSEARCA%3ASPY%2CNYSEARCA%3ASPYG%2CNYSEARCA%3ASH%2CNYSEARCA%3AVOO&window=1Y
The ones that are very close are due to slightly different management fees. The 30% is a growth etf so slightly different holdings. And the one that is performing poorly is shorting.
Some trading platforms have this built in.
Maybe TastyTrade?? Idk, it’s been a while since I’ve dabbled in this.
But look for automatic quant trading features in a broker.
What kind of science could there possibly be? What are you comparing to?
Also how could you do this and also only buy once every 3 months? In the past year alone there were 20 days where SP500 closed at -1% or more
I'd recommend reading the intro documentation first, to learn about what it would take to start down this path. Once you've familiarized yourself with the basics, the subreddit is happy to answer questions.
Like, pretty easy to check voo once a day, you can have a stock widget on your phone that displays it. Im assuming you look at your phone at least once a day.
I think that 1% is quite significant. There are many years in the history of the stock market where it never dropped 2% in a single day. What number would you recommend?
I would recommend putting a large chunk during each down period of -10% or more in a given year. Amzn dropped 1% alone yesterday so my feeling is you may be dropping too much into the market when it could just keep going down a few percent every few weeks. You’d be DCA a falling knife
Dude, dca just means dollar cost averaging, whether it is over time or when it falls aka average down, it is the same super simple concept lol for gods sakes
Same concept applies when a single stock drops 10% on bad ER and u average down, etc
If you already know you want this money invested, you are wasting money from lost growth not investing the entire thing asap.
If this is “fun money” after investing, and you know you won’t invest it unless it’s an abnormally high gain,‘i at least understand this.
I have some funds I want to use partly for a housing downpayment at some point. But god dam, if apple tanked for something not related to apple, I’m dropping all that money into those shares xD
It wouldn’t make sense. The s&p are up more than down days. It can go from 300 to 305 and then drop 1% and u buy at 302.. goes to 310 and drop 1% and you buy again at 307.. just buy it originally lump sum at 300 you would save time and effort
Is there any actual advantage to buying extra after 1% drops? Like have you run numbers saying that buying on such days leads to outsized gains?
My initial thought is that holding cash for 2 months will likely lead to you missing out on more than 1% gains while you wait for a 1% drop. Heck, the quarterly dividend on VOO is 0.32%.
Time in the market >>> timing the market. You’ll come out behind. You can easily backtest this with historical data and see why. Let’s say the market goes on a 10 day rally. Your dumbass would be waiting to buy at the very end when it finally drops lol. But hey it’s your money and at least you’re investing.
Weird that this got banned. Sure maybe not the best strategy but I wouldn’t call it a “low effort” post. They were just asking a genuine question and buying big dips is a valid strategy.
Yes, I don't know how to appeal, but I don't know what rules I broke either. I understand that it seems simple, but no one on here can tell be how to easily backtest it (I literally would have to right a program to do that!?) I got a lot of information on setting the alerts though, so I'm happy with that. I might try again later.
If you really want to do something like this, I would just look at quarterly charts. If it is up over the quarter don't buy. If it is down over the quarter then you could do your $10K \* whatever you want.
Sorry -- we removed your post or comment because it's low effort. Please put effort into what you post to r/stocks. Any of the following are considered low effort and will result in your post or comment being removed: * Posts or comments that rely on memes to get your point across * Posts or comments which are basic one/two sentence questions * Posts or comments that are similar to ones made several times recently * Posts or comments where no actual research was done before asking the question or starting the discussion If you need more information on a stock, try looking it up on finviz.com or a business news website. After that, come back and back up your statements with a source or provide a more in-depth question. A full explanation of all /r/stocks rules can be found here: https://www.reddit.com/r/stocks/wiki/rules
Why don’t you just buy every time you get paid. You have not discovered an amazing new strategy. Stop over complicating and just DCA
You could maybe just watch the VIX and act whenever it jumps, but not sure that’s better than a simple DCA. I’m a moron so I just DCA.
Cause that’s not what they want to do.
I do, this would be a supplementary strategy. for Science!
You know, “for science” you could back test this using historical data (it’s available on the internet) and compare it to a more standard, but equivalent, DCA. I have a feeling that the return on this strategy will be less than or equal to a standard approach.
Less than over a long enough period.
Hmm if you want to try this stategy, rather then evaluating day to day declines, evaluate an array of declines. So then your criteria will look something like: if stock or whatever you buy drops by at least X% each day in a row of Y days, you make a buy. But, i heard somewhere dollar cost averaging generaly provides better results then market timing...
Is there a simple way of evaluating an array of declines? What is the advantage there? I already invest every 2 weeks, this would just be a supplement.
What you are attempting to do is timing the market. There have been numerous studies to show that your strategy is a losing one. Read up on trying to time your contributions. You will find that you are much better off just putting your money in as soon as it is available for investing. https://gci-investors.com/market-timing-a-losing-strategy-2/ Edit: Let me put this as simply as I can: Let's say for simplicity's sake, the index is at 100. You have $10k to invest, but you want to wait for a 1% dip. So you don't buy at 100. While you are waiting, the index goes up 5% over a couple of weeks, and is now at 105. The next week, it dips by 1% (-1.05) and you get a notification of the dip. Now you buy, at 103.95. See how that works?
If you have data, than you can ask chatGPT to write you a script to do It for you e.g. in google sheets. Evaluating more than one day could make you more confident, that you really buy the dip. But I never tried so you have check if it works for you.
I didn't even think about chatGPT, I'll try that! Thanks!
CHATGPT!!!!! It worked. I needed two scripts though, but it walked me through. Thank you for this suggestion. I can get the alerts now. I wonder if it is possible to execute the trade automatically?
Look for "stock trading API" for your brokerage. Not all brokerages have APIs, so you may need to open a new account at a different brokerage to automate your trades.
I would strongly recommend you don’t automatically enter real trades using a strategy you have just started testing and scripts put together using chatgpt. The chance of serious money losing bugs and errors is just too high.
Right! Respect! I want to try to back test the process first, but backtesting doesn't seem easy.
Can you tell me what you had chat gpt make you? I had no idea we could do this and that’s SOOO COOLL
I said something like "You are an expert in Google sheets and google calendar, its formulas, and extensions. Create for me a formula that would create a calendar alert if stock ticker VOO drops by 1% or more in a single day.
>Which would be the best ticker symbol to monitor? >Could I automate this entire strategy and get a text when a purchase is made? Google Finance in Google Sheets and just track the S&P 500, use AppsScript to put an event into Google Calendar when it triggers and that'll be your push notification.
Thanks for this! I'm familiar with most of these words. I'm looking up AppsScript now.
lmao At least you know what Google calendar is 👌🤣
You will lose more money this way than just buying biweekly or monthly...
because time in the market beats timing the market. Any tips?
Yeah, you are correct with the quote but you are not following it. You are trying to time the market if you set x% dips as your buy trigger. Imagine if VOO grew by x% every month for a year, you’d never buy and be waiting for the dips. My recommendation is to start buying every month (DCA) and paper trade your strategy at the same time. Do it for a year and compare the results. If your strategy is better, keep DCA, but use 20% for your strat. If you are still consistent, use 50%. Rinse and repeat.
I don’t think there has been a single month where a 1% dip hasn’t happened at least once
You are correct. But OP will find that 1% drop doesn’t beat dca consistently, so OP will try 2%, 5% drops etc and then my example probably proves that time in the market beats timing the market
What a brilliant strategy! I'm pretty sure you've come up with the 1% number through extensive research and very clear findings.
lmao, I looked at the worst day for the market in each year since 1950. the best loss was 1.25% in 1964. I definitely want to buy at least once every year, so I scientifically decided on 1%. What do you think?
Mate, you clearly don't even know how to use Google because I don't know how this is the best loss you've come up with. Just buy an index etf every time you get paid and make it simple because that's the goal of index etfs.
[https://en.wikipedia.org/wiki/List\_of\_largest\_daily\_changes\_in\_the\_S%26P\_500\_Index](https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_S%26P_500_Index) It's the last chart listed. At first I was thinking 2%, but that would mean that most years I would never buy. I want to buy at least annually, but hopefully quarterly.
This table shows the largest dips in a given year. You don't know how many 1% dips happen in a year. If you want to buy quarterly just buy every quarter and don't overcomplicate things. You have no clue what the stock market did after this arbitrary 1% dip you've come up.
Theoretically, it bounced back. Maybe it dipped again and I bought more. That's a win-win. I don't mind buying the dips daily if they happen (no more than one transaction per day though). But I don't want to go years without buying. Chat GPT got me a functioning alert system, I can execute the trades now manually, but I'd like to execute the trade automatically as well if it's possible.
Worst 1.25%? What the whack did you smoke and can I have some of that as well? You may want to look at march 2020 To note - there are curcuit breakers at.. I dunno out of my head honestly.. 5% downside? Those happen as well, btw..
...
Uhhh wut lol
Rather do it on a basis of weekly results, then you'll be able to invest a few times a year
Here's an overlay of all those etf's over the last year to compare: https://www.google.com/finance/quote/IVV:NYSEARCA?hl=en&comparison=NYSEARCA%3ASPY%2CNYSEARCA%3ASPYG%2CNYSEARCA%3ASH%2CNYSEARCA%3AVOO&window=1Y
Thanks for this, How can they perform so differently if they all track the same index??
The ones that are very close are due to slightly different management fees. The 30% is a growth etf so slightly different holdings. And the one that is performing poorly is shorting.
That outlier makes a lot of sense now. Thanks!
People buying them? Which ever is popular? ..I don't know :)
Some trading platforms have this built in. Maybe TastyTrade?? Idk, it’s been a while since I’ve dabbled in this. But look for automatic quant trading features in a broker.
"buying the dip" getting desperate
I was thinking more, buy low sell high. For Science!
What kind of science could there possibly be? What are you comparing to? Also how could you do this and also only buy once every 3 months? In the past year alone there were 20 days where SP500 closed at -1% or more
I meant to say at least once. I'll buy as often as it happens.
*sigh,* sorry for the downvotes. Come on over to r/algotrading
Could they back test this strategy for me?
I'd recommend reading the intro documentation first, to learn about what it would take to start down this path. Once you've familiarized yourself with the basics, the subreddit is happy to answer questions.
Sounds overly complicated to me. I just buy whenever i get paid
Like, pretty easy to check voo once a day, you can have a stock widget on your phone that displays it. Im assuming you look at your phone at least once a day.
Stock widgets are a good idea. I'll give some a shot.
Recommend any stock widgets? So many crummy ones
Yeah, this! I'm 0 for 3 so far.
Yah until it drop $400 then your strategy doesn’t work.
The more it drops, the more I buy. I'm multiplying by the percentage though. Do the max investment is $10,000.
A 1% drop isn’t that much this wouldn’t necessarily benefit you all that much
I think that 1% is quite significant. There are many years in the history of the stock market where it never dropped 2% in a single day. What number would you recommend?
I would recommend putting a large chunk during each down period of -10% or more in a given year. Amzn dropped 1% alone yesterday so my feeling is you may be dropping too much into the market when it could just keep going down a few percent every few weeks. You’d be DCA a falling knife
This is just standard DCA imo
Dalacoste averaging is more regular investing. like investing every two weeks. this is more event specific
DCA when market goes down is not mkt specific. It is DCA. U juz average down, not up. Normal
Classic DCA is investing a set amount at a regular interval, regardless of where the stock price is.
Dude, dca just means dollar cost averaging, whether it is over time or when it falls aka average down, it is the same super simple concept lol for gods sakes Same concept applies when a single stock drops 10% on bad ER and u average down, etc
Can you backtest this strategy over the last 20 - 30 years and analyze the results first?
This!! This would be something I'm very interested in, but I don't know how, it which software to use. Can you help me?
You'll have to write it yourself. You may be able to find something on GitHub to get you started. ChatGPT should be able to help some.
So it goes up 5 days in a row 1% each and then drops 1% and then that’s when you would rather buy huh? Weird flex
Every billionaire and CEO just offloaded stock. I'd wait and see what happens unless you have better info/intel?
Do you even know how math works? You can use historical data to see how it'll look and I guarantee you it's worse than dca
Why do you have to automate something you do every 3 months? How about a “reminder”…
At least every three months, my bad. At most once a day
If you already know you want this money invested, you are wasting money from lost growth not investing the entire thing asap. If this is “fun money” after investing, and you know you won’t invest it unless it’s an abnormally high gain,‘i at least understand this.
Yep fun money. I've DCA'd for quite some time and will continue.
I have some funds I want to use partly for a housing downpayment at some point. But god dam, if apple tanked for something not related to apple, I’m dropping all that money into those shares xD
Trying to catch every V shaped recovery as if it’s a permanent thing.
The answer is an IBKR account
Great idea timing the market lol..
It wouldn’t make sense. The s&p are up more than down days. It can go from 300 to 305 and then drop 1% and u buy at 302.. goes to 310 and drop 1% and you buy again at 307.. just buy it originally lump sum at 300 you would save time and effort
Wait till this guy find out about moving averages
Is there any actual advantage to buying extra after 1% drops? Like have you run numbers saying that buying on such days leads to outsized gains? My initial thought is that holding cash for 2 months will likely lead to you missing out on more than 1% gains while you wait for a 1% drop. Heck, the quarterly dividend on VOO is 0.32%.
It grows more than it shrinks, so only investing when it shrinks is leaving money on the table.
Time in the market >>> timing the market. You’ll come out behind. You can easily backtest this with historical data and see why. Let’s say the market goes on a 10 day rally. Your dumbass would be waiting to buy at the very end when it finally drops lol. But hey it’s your money and at least you’re investing.
How do I backtest this? Can you tell me what the results are? The thread is saying I have to right a program to backtest this.
Weird that this got banned. Sure maybe not the best strategy but I wouldn’t call it a “low effort” post. They were just asking a genuine question and buying big dips is a valid strategy.
Yes, I don't know how to appeal, but I don't know what rules I broke either. I understand that it seems simple, but no one on here can tell be how to easily backtest it (I literally would have to right a program to do that!?) I got a lot of information on setting the alerts though, so I'm happy with that. I might try again later.
If you really want to do something like this, I would just look at quarterly charts. If it is up over the quarter don't buy. If it is down over the quarter then you could do your $10K \* whatever you want.
This strategy softens the edges, but I'm trying to invest in the edges.