Anyone ever tried, or thought about this at least? Let's say you wanted to slowly accumulate an asset over time. No big rush, just over the next year or what not you wanted to pick up a good amount. You are in it for the long haul. But you want to try and take advantage of the price movement a little - you know there will be days where the asset is up a good bit for no apparent reason, and down a good bit for no apparent reason. Just people buying and selling because they need out or in, etc. etc. So every day you set a limit buy price for the asset. Maybe like 3% below open for example. So you will slowly accumulate over time on the days where big funds sell out in bulk, rumors run rampant, techno-dorks get all silly and see some squiggles on the charts telling them its time to sell, momentum freaks see the asset down 2% so they figure its a good time to sell short and that pushes it down further for no good reason, etc. etc. So you are slowly accumulating on modest daily drops in the asset. Nibble, nibble. Just like a patient mouse, slowly picking up the asset as discounted prices over time. Nibble nibble. Now, you want to accumulate long term, but you ain't above taking a little profit when the asset spikes up in value a bit more than normal. So you set a limit sell each day. Maybe like 5% above open. So as people buy because of squiggles on a chart or their other indicators, there you are. Willing, each day, to unload just a little to them. Dribbling out those shares all slow like. Oh, up 5% today? Sure, I'll sell you 100 shares. I'll dribble just a little out to you. Then it drops the next day below your threshold, you nibble a bit more. Rises above you threshold? You dribble out a little more out. Always there, always ready. Like a crouching tiger, hidden dragon. Silently ready to pounce and step up with shares - dribbling when people have buy mania, nibbling when people have sale mania. Buying in, on average, on significant drops, only to be ready to sell, on average, on significant rises. How can this not work over time? Now, the asset can't be any old asset. Like, it probably shouldn't be any stock. You could easily get burned. You could set your buy order 5% below open, but bad news could come out and the stock is down 30% and you nibbled in at 5% down. No bueno. Other assets, I bet, would work GREAT. ETFs or closed end funds. People come in an out of those every day, not based on news but just because. Some thing with like commodities like gold or silver funds or what not as well should work great. You want to accumulate some precious metals over time? Nibble nibble, dribble dribble. You nibble into them over time, dribbling some out on occasion when prices spike during the day. Nibble nibble, dribble dribble, your way to profits. Seems so easy peasy...
Seriously, you posted 1 minute after my original post. You didn't even have enough time to read it, much less reflect on it....
This sounds like a form of Value Averaging See also "How to Make $1,000,000 in the Stock Market Automatically," Robert Lichello https://toughnickel.com/personal-finance/robertlichelloAIMSystem Back-Testing the Robert Lichello Automatic Investment Management (AIM) System for Timing the Stock Market
I think I might do just that! But there are 1000s of assets it can work awesome on. Was hoping someone had some ideas for the perfect assets and what not.
Basically a series of small Mean Reversion trades, similar to Bollinger Bands. I've tried something like this. In 2015 I wrote an algo to trade in this manner. I took a hit, because the instrument (GS, if memory serves) made a sharp move against me to a new price level, and put me in a deep hole.... but I was day-trading the strat. Maybe longer term it would be more effective. - The fees can add up, depending on the number of nibbles and dribbles. - The market will also make small moves against you, and slow you down. - Assuming you're a retail broker, you usually get the worst price matches. This may be a factor.
The market goes up a lot more than it goes down so you're almost always better off going all in with your lump sum than dollar cost averaging over any length of time. The main exception is if you know for a fact a crash is imminent and you wait to get in at the bottom. But then if you knew that..