Monday 20 December 2021 10:10 – by Moosh
Hello again. I have not been in hibernation. When I was a kid my parents were always suspicious when I was quiet because it meant I was up to something, and nothing changed! I have indeed been busy behind the scenes thinking, researching, testing, analyzing and drawing conclusions for a volume-based buying strategy.
As a regular buy investor, I wondered if I could use volume to dictate how many stocks to buy. Since testing started in the summer of 2021, the results of 28 trades are encouraging as I can successfully use the volume to build up a position gradually and also use it to monitor the strength of the trend. Didn’t expect this to be so useful with a quick turnaround time, but here we are. I’m still in test mode but thought it might be helpful for anyone who likes to be more careful with money management.
– Find previous Moosh blog posts here
For example, the volume on day 1 corresponds to 2 million shares, or 2,000,000 shares. Let’s call it 2000 units. Shares can be stocks or securities. If it is actions, it can be increased or reduced, for example, 10 units correspond to 1 share. For the value, 1 unit could be 20p. This is great because you can control the scaling of units based on your own financial situation and business fundamentals. There is also flexibility about when you choose Day 1 and whether you only buy if subsequent purchases after an average initial purchase go down or not. Experience, I will tend to keep buying in volume until they don’t go down any more on average, after which the price usually tends to go up.
More importantly, buying in volume takes the emotions out of investing. I will calculate the total to buy until it exceeds a threshold value, subject to not averaging as I just indicated. Depending on the volume, purchases can be made at intervals of 1 to 3 weeks.
I am currently reallocating any released capital from old slices in volume buying going forward because I’m confident in the results I’m getting and getting reasonable exposure that I’m comfortable with and they recognize the role of the market.
The views of the writer are his own and not a representation of those of South East London. No advice is deducted or given. If you need financial advice, please consult an independent financial advisor.