A thread on Price Based Systematic Investment Plan (PB-SIP) methodology which I follow for my stock investments 👇

In this thread I write about
- What is price based SIP?
- Features of PB-SIP
- What is the merit of Price Based-SIP over Time Based SIP (TB-SIP)?

Note:
- This methodology is NOT backtested (so, it could be bullshit). I follow this approach because it makes logical sense to me

- This method is not about how to pick the right stocks. This is about how I do SIP in the stocks that I already shortlisted based on fundamentals

What is SIP?

SIP is a methodology where an investor invests in an instrument in a periodic manner.

The metric widely used to define periodicity is time i.e, SIP is done monthly or bi-weekly or quarterly.

However the periodicity could also be dictated by price instead of time.

What is Price Based SIP?

- PBSIP is the type of SIP where you do a SIP instalment when price action gives you a signal to buy

- The time intervals between two PB-SIP instalments is uneven and dictated by price action

- The SIP instalment amount is also dictated by price action

Features of PBSIP:

- SIP amount is proportional to how far the buy price is away from 52 week high

- During downtrend, the SIP amount will be equivalent to martingale type position sizing

- During uptrend, the SIP amount will be equivalent to pyramiding type position sizing