I've been shedding all my shares, some which I've held since 2007. I made roughly 5% plus dividends on my BHP shares that I bought way back on 9 October 2007.
Thinking there must be a better way, I began developing some software that would attempt to give me a signal when to buy and sell.
The idea was that if during a certain time span if a share was to drop in price by a certain percentage I would buy it. I would sell it again when it either rises above that same percentage or when the price drops below my stop point. The idea would be that I would reinvest the profits back into the share price and see how much better I could do.
I just finished developing this software today and have experimented with various variables on my BHP shares bought on October 9 2007 to find out how much I could have made - the results surprised me a lot.
The best scenario I found would turn my starting capital of $5,000 on 9 October 2007 into a jaw dropping $75,846.24 on 31 March 2011.
Ok, these are the variables I used:
If during any 10 day period the share price of BHP dropped 4% I would buy.
I would only sell the shares if the shares went above 4% or if the price dropped below 30% of my purchase price.
All profits/losses would be re invested into the next buying opportunity.
In all transactions I used the days closing price and have included commsec commissions.
BHP only hit my stop point once on 30 September.
The attached spreadsheet shows all the transactions that would have occurred.