Silver is flying right now. My silver holdings are already up 94%, feels great but also feels like I should’ve invested more. Now I’m confused is this the right time to average or just FOMO talking?
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Gold might be better as it is not as volatile as silver.
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GOLD is the next new SILVER. 
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This. IMO
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But in retrospect, FOMO in this case wouldve paid off spectacularly at any point in time during the last year or the previous. In a year on year trending market, FOMO is not so bad. In a range bound market, FOMO would kill you.
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Feels like the perfect time to switch on privacy mode.
But who really decides when it’s a trending market vs a range bound one? Most of the time it’s just intuition and a bit of luck. That’s exactly why you see so much content like “If you had invested X amount in 2020…" because clarity only comes once the move is already done.
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I mean time. If for 3-6 months, it keeps on making new highs, it’s trending month over month. But Gold has been trending over two years now. Other things to consider
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Higher high than expected(by most agencies) and stays there more time
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Drawdown/fall/pullback not as deep as you’d expected. Let’s say 0.5 fibonacci never gets touched. All pullbacks are quickly bought into…
It’s not like there was no marker at all. But yes, you might buy and it might start to fall… It’s not like there’s no risk at all…
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Who knows if it’s the end of the trend. 2 months back so many were panicking when silver fell 20 percent from top. Who knows if this is the top. It’s best to stay away for sometime. Let it settle down a bit.
Look at nifty. So many are still crying for investing at 26k last year. And then nifty gave a very good opportunity for the ones who didn’t fall for fomo.
That’s the thing. If you had bought it at any top and it fell, the drawdown barely lasted a month and the drawdown wasn’t significant(<0.5 fib of the recent upmove). Also, this drawdown barely happened in Gold. Gold for less volatility.
Of course you don’t. You can only know the top after the fact. But silver broke multi decade high and 1.stayed for almost a month 2. making significant gains above that high.
Yeah …That’s kinda my point. It’s not like NIFTY. Nifty is basically range bound for almost a year now. Patient strategy worked well with NIFTY for the last year. Panic strategy worked spectacularly well for past 2 years with precious metals.
It’s always in past tense. Tell me what will work in next 2 years.
IMO, it’s better to buy at 10 percent correction from top, than just buy at top.
We do not know where the top is. But no harm in waiting.
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If you followed a simple breakout strategy as per the chart, you’d be up 33%. If it corrects from here, 10% correction is still 30% gain from previous breakout. So, you’d still be buying at 30% premium. In essence, buying at 10% correction is equal to panic buying 3-4 days before today. If you had bought at any random point paying 10%, 15%, 25% premium from previous breakout, you’d still be up today. The problem with trending markets is it barely gives you opportunity to get them: Drawdown/correction is very less. Instead of waiting for correction, wouldn’t it be better to just buy, according to your risk appetite and put a stop loss, given that history says the odds of pullbacks are very less?
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There are no stop losses for investors.
Investors buy more on dips.
I didn’t get this logic. Mathematically it’s not matching.
Forget about actual prices. If break out happens at 100, after 33 percent it reached 133. 10 percent correction from there is 13 rupees. So that’s 120. So from original value it’s 20 percent higher. How did you get 30 percent?
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Seems like a long term way to blow your account. At least in F&O, you’d know you’re wrong quickly, be able to acknowledge your mistake and do something about it. So they just keep on averaging on securities until they or the company dies? To what end?
My mistake. You’re right.
Investors don’t blow their account. Only traders do.
Investors don’t buy it in futures. Traders do.
There is a way to avg. not all investors blindly average. You only average value stocks.
No point of examples. I can give you 100 plus value stocks which have given multi fold return after hitting your so called stop loss.
Take one for now. Tatamo. Hit 60 levels in 2020. Now at 800. Combined valued of demerged entities. We can go on with examples. Please don’t confuse trading with investment.
Even in trading, I don’t use SL at all. We all have different way to trade and invest.
I guess the point is what if you’re wrong? At what point will you accept that you’re wrong and stop averaging or exit a strategy? SL is just that. Diversifying is another way. We don’t want all eggs in one basket, because if we are wrong it all goes to bust. Risk management is the way to control losses in the scenario that we are wrong. That’s why you said you only bet 0.5% of your capital and not 50% or 100% of your capital. SL is exactly the same. At some point you have to accept that you are wrong, regardless of what you call yourself - trader or investor.
Naked or covered option sell? if naked, do you exit at 0.5% of capital loss or will you let a trade take 10% or 20%? If you do exit or if it is covered, isn’t it exactly like a SL? While your accuracy rate might be 99%, will you let the 1% wrong trade go and take all your profits?
When the fundamental changes.
There will be some criteria beyond which you decided to invest. If that changes then there is no point in holding on to that investment. What I am saying is price isn’t a Criteria.
Mine is all covered. I was just saying I don’t place SL.
That’s fair.
You said you’ll wait for a 10% correction to invest in silver. If price is a criteria for such investment entry, why not for the exit too?
Investing works on valuation. I want something 10 percent cheaper than the price paid by someone at ATH. If the price is coming down, fundamentals not changing, then I am happy to buy more at lower price. To sell I would wait for higher price or for asset fundamentals to change.