I'm a beginner retail trader, and I'm trying to come up with a strategy to follow. I know that there is no silver bullet, and I'm ok to exit a trade losing money. I'll only invest in good companies with good management. I'm fine staying in trades for 2 to 8 weeks. With that said, here is the strategy:
Let's say I have 100k dollars to invest in stocks.
At a given moment a stock is 10% below what I think it should be (Of course I know it's very likely that I'm wrong). I buy 5k of this stock. The price keeps falling in the next days, so I buy 5k more averaging the price down. The price keeps falling down and I buy 10k more averaging it down one last time.
I would get to this point only if the circumstances didn't change, and I still think the prices should go up. This is the last step of my strategy, where I had 20% of my stock money in one single stock. If the price kept going down, I would finally exit the trade.
So my question is: What are the problems with this strategy? Did I miss something? Could this be considered a good strategy?