Since the 2009 stock market low, the Spyder Trust (SPY) has recorded five double digit yearly gains. Clearly, 2013 was the best year as the SPY recorded a gain of 32.31%. Though this has been a tremendous bull market, many have not done as well as the market averages.
This is likely due in part to the impact of the 24-hour news cycle and a financial press that attempts to provide exciting programming by alternating—sometimes daily—between a boom or bust scenario. This, I believe, contributes to many investors staying on the sidelines. During the bull market, there have been a number of panic declines over a short-term concern where the selling seems to reach a fever pitch before the market again turns higher.
I think the other main reason that many do not do as well as the averages is that they get in a stock or ETF at too high a price and then are forced to sell on the inevitable corrections. These were two of the steps outlined at the start of the year as 5 Mistakes to Avoid in 2015.
In this week’s trading lesson, I will be looking at four methods or tips that I use to identify the price levels where one should be buying the dips while still controlling the risk.
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