Investment Methodology
While analyzing the Infinite Buy and Seven Split methods, I noticed some commonalities.
Select a stock.
Determine the amount to invest in the selected stock and divide it into portions.
Determine the investment and withdrawal timing.
Execute the process properly.
Upon trying it, I realized that steps 1 through 4 were not as simple as they seemed.
1. Select a Stock
Fundamentally, it should be a stock with long-term, upward growth potential.
It should also avoid delisting, and high volatility is preferable.
Therefore, the Infinite Buy method recommended ETFs and 3X leveraged stocks, particularly in the US stock market.
So, I initially selected four stocks: TQQQ, FNGU, SOXL, and UPRO.
2. Determine the Amount to Invest in the Selected Stock and Divide it into Portions
In the Infinite Buy method, it's believed that the investment was ultimately divided into 80 portions,
and in the Seven Split method, it's considered to be 7 portions.
My initial investment capital was not large,
and since I planned to monitor and review additional purchases after programming,
I decided to initially plan for only 2-3 splits per stock.
Calculating the amounts from the beginning was difficult to program, so I considered equal division.
3. Determine the Investment and Withdrawal Timing
The initial purchase is made when the stock is not already held, and only the 1-tier amount is purchased.
For example, in the case of FNGU, purchase 240 / 2 = 120 worth. If the current price of FNGU is 35.05, purchase 3 shares.
(Do not exceed the purchasable amount. In other words, 120 / 35.05 = 3.423, but discard the decimal part, resulting in 3.)
The second purchase is made when the price reaches DOWN_RT percent below the initial purchase price.
For example, if the current price of FNGU is 35.05 X 0.975 = 34.1737,
120 / 34.1737 = 3.5114, so purchase 3 shares at 34.1737.
If, after the purchase at 34.1737, the current price of FNGU reaches 34.1737 X 0.975 = 33.3193,
the third purchase is not made. Why? Because TOTAL_TIER is set to 2.
In other words, even if FNGU falls further, there is no remaining cash available to purchase more.
Conversely, a sale is made when the price reaches UP_RT percent above the purchase price.
For example, if 3 shares were previously purchased at 34.1737 and the current price of FNGU is 34.1737 X 1.05 = 35.8823,
sell 3 shares at 35.8823. (Currently, 6 shares of FNGU are held, but only the shares from the second purchase are sold.)
4. Execute the Process Properly
Although the planned buying and selling can be performed using LOC orders,
given that this methodology involves continuous monitoring and repetitive buying and selling of highly volatile stocks,
I programmed an RPA to repeatedly check the current prices of the monitored stocks
and execute the buying and selling processes accurately based on the three conditions described earlier.
Conclusion
Honestly, I believe that each methodology has its own advantages and disadvantages, and individual preferences play a significant role in decision-making.
Since I am still lacking in knowledge about the stock market and economics in general,
I believed that the fastest approach was to research and analyze the experiences and know-how of past investors and then attempt to implement them.
Now that I've begun, I need to monitor the results throughout August 2021 and make adjustments as needed.
Postscript
I'm also applying the same methodology to Korean stock trading,
but the execution method differs slightly,
and because it uses APIs provided by brokerage firms, it's executed more precisely,
but my personal investment allocation is lower than for US stocks.
(To invest in leveraged ETFs in Korean stocks, you need a minimum deposit of 10 million won?!!!)
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