I found this technique quite useful. I’ve been using it in some of my investments as well. First, you will need to find a company which you believe it has growth potential and you are willing to invest in for the long run. How to find that specific company? Do a fundamental analysis on the company and try to determine if the company’s share is fair value. (There will be a separate post on how to do fundamental analysis in the near term). Let’s say you did your due diligence and came to a conclusion that you are going to invest in this company. You would buy 100 shares at first. Then you purchase another 2 blocks of 50 shares over the next month or two. Now you have 200 shares in total. Because you are planning to keep this company in your portfolio for the long term, you could keep 100 shares as your core position which means you will not sell those 100 shares in the near future. Stock price is never a straight line. There is always ups and downs. Now you have 200-100 = 100 shares left for you to trade around your core position. Some time later, if the share price goes up to say 6%(any target price you have), then you may sell 25(any number you would like to sell) shares and profit in. If it goes up again, you could sell another 25 shares. After you sell all 100 shares, you will have to wait for the price to come down. Once the price is close to the fair value that you estimated, you could buy back in again. Don’t purchase 100 shares at once. Try to break it down to blocks of 25 or 50. Don’t worry if you estimation is incorrect, you could always average down by buying shares lower than previous purchase. Please remember you still have your core position(100 shares) after all these trades. This might appear to be small income but over time the profits add up. In conclusion, it is a repetition of selling it when price goes up, and buy back when price drops.
P.S. While you are waiting for the price to drop, you still need to do your homework and keep up to date with your investment. Good news may trigger a pop whereas bad news could lead to a drop. Hope this could help, happy investing:)