Evaluate this stock strategy. Is this a good way to invest in stocks?

[The_Controvert]

@msmith537

And as others have already pointed out, you aren’t purchasing the stock “cheaper than a regular trade”. You purchasing the stock at a market price you think will occur some time after the opening bell.

The goal is to purchase it cheaper. One way to accomplish the goal is to make multiple attempts with limit orders. By looking at the history of the S&P index, one can note that A) it is not monotonically increasing and B) there’s an amount by which it fluctuates that seems to indicate an advantage with limit orders.

That’s all I’m saying. It seems there’s a knee-jerk reaction on this board anytime someone mentions a stock strategy other than the commonly accepted one. Anyone trying to “beat the index average” automatically raises a giant red flag. Note: I’m not trying to do that.

I suspect this is why there seems to be a fixation on the selling. The swarming fire ants response is unwarranted and frankly, unjustified.

[iamthewalrus_3]

@The_Controvert

It seems there’s a knee-jerk reaction on this board anytime someone mentions a stock strategy other than the commonly accepted one.

I don’t think that’s what’s happening. You’ve posted a strategy that’s based on a sort of price-anchoring misconception, and lots of people are trying to point that out to you, in a lot of different ways. But you don’t seem to understand the misconception that’s leading you astray. You also haven’t actually done any quantitative analysis. There’s a lot of “you can tell by looking” and “this seems better” in your posts, and zero “I backtested a simulation against historical data and I see an x% improvement with this strategy”. Note that doing such a backtest isn’t necessarily a guarantee that the strategy will work in the future. But the lack of one is pretty damning.

Is the reluctance to do such a thing because you don’t know how? If so, I’m sure several people here would be happy to explain how to do so. I can send you the code I wrote for the brief test I ran.

Anyone trying to “beat the index average” automatically raises a giant red flag. Note: I’m not trying to do that.

You’re not? So, this strategy isn’t supposed to do any better than just buying an index and holding it? What’s the point of the strategy then?

The swarming fire ants response is unwarranted and frankly, unjustified.

At least seven separate people have pointed out the same basic flaw in your plan. Is it possible that we’re not kneejerking, but we’re actually right? I will concede that there are several posters who are completely off the mark and focusing on a selling strategy. But most are actually directly responding to your stated strategy. And they’re telling you it doesn’t work. What sort of evidence would sway your opinion?

@dracoi

It just seems like waiting for a price drop has implications about the direction an index/market is already heading.

No, this isn’t true. And, in fact, it’s basically the same fallacy the OP is falling prey to. There’s no “momentum” in stock market prices. You can’t figure out what the next price for a stock will be based solely on the trend of previous prices. It really is a random walk. The only reasonable prediction you can make from knowing the price is that you should probably predict a future price pretty close to the current market price, rising a bit based on the average upward trend of the stock market.

[msmith537]

@The_Controvert

The goal is to purchase it cheaper. One way to accomplish the goal is to make multiple attempts with limit orders. By looking at the history of the S&P index, one can note that A) it is not monotonically increasing and B) there’s an amount by which it fluctuates that seems to indicate an advantage with limit orders.

That’s all I’m saying. It seems there’s a knee-jerk reaction on this board anytime someone mentions a stock strategy other than the commonly accepted one. Anyone trying to “beat the index average” automatically raises a giant red flag. Note: I’m not trying to do that.

I suspect this is why there seems to be a fixation on the selling. The swarming fire ants response is unwarranted and frankly, unjustified.

Then go make your millions Gordon Gekko.

[mbetter]

@The_Controvert

The goal is to purchase it cheaper. One way to accomplish the goal is to make multiple attempts with limit orders. By looking at the history of the S&P index, one can note that A) it is not monotonically increasing and B) there’s an amount by which it fluctuates that seems to indicate an advantage with limit orders.

That’s all I’m saying. It seems there’s a knee-jerk reaction on this board anytime someone mentions a stock strategy other than the commonly accepted one. Anyone trying to “beat the index average” automatically raises a giant red flag. Note: I’m not trying to do that.

I suspect this is why there seems to be a fixation on the selling. The swarming fire ants response is unwarranted and frankly, unjustified.

Historically, the stock market tends to creep upwards and plunge downwards. Your strategy has no advantage to the “always buy” strategy in capturing the upward creep but ensures that you will always capture the downward plunges. It is therefore an entirely inferior strategy.