I'm wondering how many here average down when they are in a dropping stock to try and save their loses?
For instance let's say you buy in a .0015 for a million shares.
Then the stock takes a big tumble down too lets say .0007 or .0008 range.
Do you then buy another million or two at the .0007 or .0008 range if it's holding stable at that price?
This way you can sell in the .001 .0011 range and cover your loses and still take a small profit. This is of course assuming the the stock price will go back up but maybe not as high as you bought it at.
Typically I cut my loses and either buy back more at the low or I move to another stock. I'm just wondering how many play that kind of game?
Posted by RiescoDiQui on :
pay attention cause this bit is important:
DON"T AVERAGE DOWN!!!!!!!
crockett has it right... if it goes down after you buy it cut your losses and go elsewhere or buy back in when the price settles... Even buying back in at a higher price is prefferable to watching it drop to zero. Alot of this game is waiting for confirmation of trends.
Posted by WarpedMind on :
Generally I hear it's not a great idea. From my own experience, it hasn't really worked for me. But really, I guess it all depends on the stock and how sure you are that it'll bounce back.
Of course, look how many people averaged down on Enron. Ouch.
Posted by Danny K on :
I personally stay away from it. I will sell at a lose befor i sit around watch it drop and buy more along the way. honestly i lost big time on doing that on CWFG. i could have made a couple grand on cwfg, but noooo I had to be retarded little kid that acually belived in a company. LOL ever since i cut my loses and possibly buy back. i am perfecting how and when to cut losses, thats the hard part. I have sold a few this month right as they run. VCTY (bought at 17 she ran to 60 over the next couple days.. lol there were 1 or two others. But it has also saved my butt from ridding a couple down into the ground also. So its almost like an art, not a science when it comes to cutting losses.
Posted by crockett on :
Yea that's what I kind of what I figured. I just wanted to see if anyone actually did it and if they did, did it work for them.
Posted by RiescoDiQui on :
talk to the guys on the QBID thread
Posted by Bearclaw on :
Find a good book on "Swing Trading"
Posted by crockett on :
quote:Originally posted by RiescoDiQui: talk to the guys on the QBID thread
lol yea I know I think I was one of the few that made a little on that one.. Posted by JoeMillion on :
Tough question. I offen average down but I like the risk. Not for the faint of heart.
Usually december is the month to average down or take a tax lost.
Joe
Posted by Ric on :
Averaging down is the worst mistake anyone could ever do. The best way to make money if you really like a stock going down in price is sell and buyback when it hits bottom. Your worst case this way if it continues down is you lose less then if you held all the way to the bottom. Averaging down is the best way to lose most of your money.
Sell a falling stock
Buy a rising stock
Thats the only two rules you need to memorize. It doesn't matter how much you like a stock set a stop limit and sell. You can always buy back. Warren Buffett stated not setting a stop limit is a sure way of losing all your money.
What gets me is someone complaining that shorting or MM's are bringing down a stock price. Whether you believe that or not why are you holding a falling stock. It doesn't matter why it is falling be it the company's fault or external reasons. Sell a falling stock. You can't blame no one but yourself for holding onto a stock dropping no matter what the reason. If it starts back up buy it back.
Always take profit whenever possible because holding real profit to long will cause you to lose at some point. If it does go up who cares the next one will burn you. For every one you could of made a little more on the next 10 will cause you to lose everything holding it too long.
Posted by Bachstocks1 on :
I agree with you all for the most part, however averaging down is NOT ALWAYS BAD...It all depends on the stock really..With QBID or ICMH for example that may be bad. If the stocks has billions of shares or the L2s look bad, dont do it. If you look at the history and see patterns and feel farily confident that the company is not diluting, its not bad. JMO though
Posted by BuyTex on :
What and Ric and others are trying to impart is a rule-of-thumb for most (penny)stocks--not the particular picks in your personal history. In that sense, in the "universe" of possible plays, yes--it's a bad idea.
Where some get confused--I believe--is when experienced traders buy on dips during an overall larger run. That's done because they know the pattern, know the stock, etc... and are simply adding to a position... This may be what you're talking about.
But as Ric says, when it starts going south--exit, scram, head for the door...you've already got your sell-order in place, right? Especially if your broker doesn't allow stop-limits...
Posted by Pital on :
quote:Originally posted by Ric: Averaging down is the worst mistake anyone could ever do. The best way to make money if you really like a stock going down in price is sell and buyback when it hits bottom. Your worst case this way if it continues down is you lose less then if you held all the way to the bottom. Averaging down is the best way to lose most of your money.
Sell a falling stock
Buy a rising stock
Thats the only two rules you need to memorize. It doesn't matter how much you like a stock set a stop limit and sell. You can always buy back. Warren Buffett stated not setting a stop limit is a sure way of losing all your money.
What gets me is someone complaining that shorting or MM's are bringing down a stock price. Whether you believe that or not why are you holding a falling stock. It doesn't matter why it is falling be it the company's fault or external reasons. Sell a falling stock. You can't blame no one but yourself for holding onto a stock dropping no matter what the reason. If it starts back up buy it back.
Always take profit whenever possible because holding real profit to long will cause you to lose at some point. If it does go up who cares the next one will burn you. For every one you could of made a little more on the next 10 will cause you to lose everything holding it too long.
What he says is true and a very good tip. Might I add when in a falling stock notice trends in the stock. Sommetimes you might get a 20-30% pullback on a shake and if you sell for that lost you will feel stupid once the stock pulls back after the shake. The best time to get into a stock is when she is pulling back. Chances are you would of missed it in the beginning but always know if a stock pull back atleast 20-30% she will go right back up to the selling point. Sometimes it's better to get in when she is running sell when the first batch of selling comes in, then get back in when she pulls back. Once again it's for those who daytrade and know the signs of a MM shake or a DUMP..
Posted by BuyTex on :
no, you might *not* add...
pure, unadulterated drivel...
quote:...but always know if a stock pull back atleast 20-30% she will go right back up to the selling point.
lol, I can't believe you've held on to this nick so long...
Posted by Pital on :
quote:Originally posted by BuyTex: no, you might *not* add...
pure, unadulterated drivel...
quote:...but always know if a stock pull back atleast 20-30% she will go right back up to the selling point.
lol, I can't believe you've held on to this nick so long...
Maybe because I am not who you think I am. Anytime someone new comes onto a board all the senior posters get so defensive. I am just trying to share my intel being I have more knowledge then say..... DQ what ever his name is. Trsut trying to help..
Posted by Bachstocks1 on :
thanks Tex and Pital...Both good points
Posted by RiescoDiQui on :
quote:Originally posted by Pital:
quote:Originally posted by BuyTex: no, you might *not* add...
pure, unadulterated drivel...
quote:...but always know if a stock pull back atleast 20-30% she will go right back up to the selling point.
lol, I can't believe you've held on to this nick so long...
Maybe because I am not who you think I am. Anytime someone new comes onto a board all the senior posters get so defensive. I am just trying to share my intel being I have more knowledge then say..... DQ what ever his name is. Trsut trying to help..
Pittyfull , I would agree with all you said except for the part where you say all selloffs are followed by a sharp increase. This is obviously not true. Also making the inference that you are more knowledgable than I is... well... Just silly. Momo has filled your tiny little cranium with lies. Stocks don't always rebound and staying in anything that is dropping is unwise. Save profit. That is one of many keys to smart trading.
Posted by JoeMillion on :
I had a stock which I averaged down for 5 years and finally one day it started upticking like crazy. I even made 4 grand. lol Averaging down is a good thing.
Joe
Posted by Pital on :
quote:Originally posted by RiescoDiQui:
quote:Originally posted by Pital:
quote:Originally posted by BuyTex: no, you might *not* add...
pure, unadulterated drivel...
quote:...but always know if a stock pull back atleast 20-30% she will go right back up to the selling point.
lol, I can't believe you've held on to this nick so long...
Maybe because I am not who you think I am. Anytime someone new comes onto a board all the senior posters get so defensive. I am just trying to share my intel being I have more knowledge then say..... DQ what ever his name is. Trsut trying to help..
Pittyfull , I would agree with all you said except for the part where you say all selloffs are followed by a sharp increase. This is obviously not true. Also making the inference that you are more knowledgable than I is... well... Just silly. Momo has filled your tiny little cranium with lies. Stocks don't always rebound and staying in anything that is dropping is unwise. Save profit. That is one of many keys to smart trading.
So explain to us. You seem to have all the answers. So lets see your method. What's the difference between a shake and dump? Not all stocks bounce (group plays) stock that do bounce (swing trading) you will always have a pull back on a chart and then a reclimb. That's why you see the spikes on the chart. Just give it up trying to second quess me. I know more then you simple then that. Not my fault you were sleeping when I was trying to teach you how dilution works..
Posted by RiescoDiQui on :
No you do not always have a reclimb... So by your rational (and I use that word lightly) You would still be holding QBID, PLNI, or the million other POS stocks that will never rise again?
Posted by BuyTex on :
quote:Originally posted by JoeMillion: I had a stock which I averaged down for 5 years and finally one day it started upticking like crazy. I even made 4 grand. lol Averaging down is a good thing.
Joe
absolutely nothing wrong with that...if you have the dough and the patience...good call.
It's way against the norm, but, hey--good for you, bro...
Most of the scamsters that invade here? That's the *not* the play they're after, lol...
Posted by BuyTex on :
quote:Originally posted by Pital:
quote:Originally posted by BuyTex: no, you might *not* add...
pure, unadulterated drivel...
quote:...but always know if a stock pull back atleast 20-30% she will go right back up to the selling point.
lol, I can't believe you've held on to this nick so long...
Maybe because I am not who you think I am. Anytime someone new comes onto a board all the senior posters get so defensive. I am just trying to share my intel being I have more knowledge then say..... DQ what ever his name is. Trsut trying to help..
Regardless of who anyone thinks you are, lol--you post misleading information...
Posted by JoeMillion on :
buytex buddy,
So true.....
Joe
Posted by mizzou7 on :
I'm living proof... NEVER AVERAGE DOWN!!! Cut your losses and move on...
One Example: I averaged down with BLYC... From a start of .06 all the way down to .015... it's now trading on the pinks at .0003 and on the verge of total collapse... IMO... I lost Thousands on this one...
Posted by Ric on :
GZFX killed me last year. Made a killing on it to begin with and bought back in at .10 and averaged down to it cut me bad. Finally sold at .03. I guess if I continued to hold It would be back to were it was now but thats a years worth of trading with that money. And if I would have sold and bought back at bottom would have made a killing on it now. Just think if you sold high and bought back on low how much more you would have made on it then if you didn't average down. You almost always make more sell a dropping stock and buying back when it starts moving up again then averaging down.
Now if the IRS could figure out how to do math or learn to read a 1099 I would be alright. Got a letter in the mail yesterday stating that I under reported capital gains last year. They want me to pay taxes on $70,000.00. The morons got my 1099 but for some reason only the sells report. Yes I sold $70,000 dollars worth last year but It cost me a little over $50,000 to buy it. I only made a little over 19K not 70. I wish that I made $70K on swing trading pennies last year.
Posted by BuyTex on :
i think that's why purlie was so shook...
Posted by HossTrader on :
Every purchase is a new investment.
You are not really doing anything by averaging down.
You are making a new, seperate investment and hoping that it will go up enough to offset your previous loss.
Posted by Ric on :
Example:
Averaging Down
1000 shares at 1.00 for $1000.00 1000 Shares at .50 for $500.00 1000 shares at .10 for $100.00
It goes back to 1.00
3000 shares at 1.00 for $3000.00 Cost $1600.00 for a profit of $1400.00
----------------------------------------
Selling and buying back at low
1000 shares at 1.00 for $1000.00 Sold at .50 for $500.00 Bought 3000 at .10 for $300.00 went back to 1.00 for $3000.00 Cost $300.00 plus $500.00 lose
Profit is $2200.00
------------------------------------------
YOU MADE $800.00 more dollars selling and buying back at bottom. Posted by Ric on :
quote:Originally posted by HossTrader: Every purchase is a new investment.
You are not really doing anything by averaging down.
You are making a new, seperate investment and hoping that it will go up enough to offset your previous loss.
But if it never goes back up your loses are greater. And if you had sold and bought back at low your profits would be greater if it did go back up.
Posted by BuyTex on :
amazing this is not clear...
Posted by RiescoDiQui on :
First and only time I tried to average down was AFRR... ok ok I said it.. that's right AFRR got me. Since then? Nope, once was enough for me.
Posted by Ric on :
I got lucky on AFRR, I sold it to put more money into the first PHGI (GZFX) run. I remember how it was pumped on the board and how many lost big time on that pump. A week later it did its r/s wht was it Jan. 2004. Probably the only lucky move I have made, lol. But talked my boss into buying some. Glad I don't work for him anymore. LOL
Posted by Rbreb13 on :
I got this off of another forum. I forgot to get the posters name but its not mine. I read this every couple days just to reenforce it into my brain!
quote:Roller Coaster! ________________________________________ I am no expert but I will say this. When you decide to invest in stock, you can't look at it in terms of dollars spent, but rather shares held. I will leave the following numbers to illustrate...
Two Investors. Same # of shares. Same dollars into the company.
1000 shares * $1.00/share = $1000.00
Investor I 1000 shares and holds until the stock reaches the target price the 'experts' project the stock to reach * $2.00/share.
Investor II 1000 shares and watches the stock take a downward drop and looks like it is going to drop more. Sells * $.90/share.
Gets $900.00
The stock drops to $.85/share. Buys 1058 shares for $900. Notice, Investor II now has 58 more shares than at first)
Oops! The stock drops more. Investor sells 1058 shares * $.80/share. Gets $846
The stock drops to $.75/share. Buys 1128 shares for $840
Oops! The stock drops more. Investor sells 1128 shares * $.70/share. Gets $789
The stock drops to $.65/share. Buys 1213 shares $789.
Oops! The stock drops more. Investor sells 1213 shares * $.60/share. Gets $727
The stock drops to $.50/share. Investor buys 1454 shares for $727.
Now, let’s see the difference.
Investor I held 1000 shares and is now 'down' $500.00. Investor II bought and sold the whole way, and is now down $273.00 AND owns 454 more shares than Investor I.
Here is the real beauty. Investor II will break even once the share price reaches $.69/share. Investor I has to wait until the stock reaches $1.00 again. This means, Investor II can sell shares at a PROFIT long before Investor I ever breaks even!
Plus... once the stock reaches its target, Investor II reaps $2,908.00 while Investor I reaps only $2,000.00. This is nearly TWICE as much profit.
Posted by Ric on :
I have to save that one. A very good example. I did mine a little more simple but this one gives several buys and sells
Still the point is selling and buying back at bottom is always the best way to go.
This has nothing to do with dips during a run. This has to do with a stock moving down in price.
Posted by BuyTex on :
another for the reference thread...
Posted by JoeMillion on :
Average down if there is a yearly pattern or uptrend. Also company future looks bright.
Joe
Posted by stnkng1 on :
the smartest thing you can do right now IMO is drop $1000 in GZFX hold till this time next year and turn it into $10,000-$15,000 or hold for 2 years and turn it into $25,000-$30,000
JMHO
Posted by JoeMillion on :
Ric,
$19000 is great man!!!! wtg.
Joe
quote:Originally posted by Ric: GZFX killed me last year. Made a killing on it to begin with and bought back in at .10 and averaged down to it cut me bad. Finally sold at .03. I guess if I continued to hold It would be back to were it was now but thats a years worth of trading with that money. And if I would have sold and bought back at bottom would have made a killing on it now. Just think if you sold high and bought back on low how much more you would have made on it then if you didn't average down. You almost always make more sell a dropping stock and buying back when it starts moving up again then averaging down.
Now if the IRS could figure out how to do math or learn to read a 1099 I would be alright. Got a letter in the mail yesterday stating that I under reported capital gains last year. They want me to pay taxes on $70,000.00. The morons got my 1099 but for some reason only the sells report. Yes I sold $70,000 dollars worth last year but It cost me a little over $50,000 to buy it. I only made a little over 19K not 70. I wish that I made $70K on swing trading pennies last year.
Posted by HossTrader on :
quote:Originally posted by Ric:
quote:Originally posted by HossTrader: Every purchase is a new investment.
You are not really doing anything by averaging down.
You are making a new, seperate investment and hoping that it will go up enough to offset your previous loss.
But if it never goes back up your loses are greater. And if you had sold and bought back at low your profits would be greater if it did go back up.
That was my point. Don't hold on to the losing investment. Buying more doesn't fix it.
Posted by JoeMillion on :
That's the name of the game! To average down or not to average down. Im leaning towards average down with dd and chart patterns.
Sell with a lost! Never!!!!!! What about those gzfx sellers at .002? Bet they are kicking themselves silly.
Joe
Posted by The Bigfoot on :
Averaging down IS a good way to lose money...however, if you are sure of the product...it can be a good thing. This past year I made close to 200% by averaging down on IVCM. It took close to a year for the stock to recoup from its drop (I, of course, starting buying in right before the drop.) but once it did it went flying. I wouldn't have done that with just any company but I really trusted the management. I was happy to be proven right. NOT for the faint of heart or those who get easily discouraged by seeing their account balance down by over 50%!
The Foot
Posted by CMoney on :
Thanks all
This was really an informative post, esp. Rbreb13 C$
Posted by gohigh on :
It depends. Do you think the stock is going to recover or not? If you don't think so, then you're probably just throwing your money into a bottomless pit.
If there is new news or you believe it's going to come back up for some other reason, then it's an excellent way to recoup your losses.
A couple of examples for you. I bought some CALI a few months ago when it was trading at .0022. It changed it's name to SVXP and changed it's business stratagey as well. I averaged down, all the way to .0003, because I believed in the new company. Eventually it sprung back up where it is today (.0015). I've since sold most of it, and made back my original investment plus quite a bit more.
Another stock I've average down on is INSN. I originally got in at .0027. It's now sitting at .0003. Should I buy a boat load more? That depends, and I haven't made my decision yet. I'm waiting for news or a change in the chart's technical pattern.
Posted by JoeMillion on :
Wow! svxp is a good example of the power of averaging down.
Joe
Posted by bluestater on :
please, shut up about the wisdom of averaging down. it doesn't exist.
the only way that selling to buy back lower hurts you, is if you hit the pivot exactly.
Posted by R1Man on :
quote:Originally posted by Rbreb13: I got this off of another forum. I forgot to get the posters name but its not mine. I read this every couple days just to reenforce it into my brain!
quote:Roller Coaster! ________________________________________ I am no expert but I will say this. When you decide to invest in stock, you can't look at it in terms of dollars spent, but rather shares held. I will leave the following numbers to illustrate...
Two Investors. Same # of shares. Same dollars into the company.
1000 shares * $1.00/share = $1000.00
Investor I 1000 shares and holds until the stock reaches the target price the 'experts' project the stock to reach * $2.00/share.
Investor II 1000 shares and watches the stock take a downward drop and looks like it is going to drop more. Sells * $.90/share.
Gets $900.00
The stock drops to $.85/share. Buys 1058 shares for $900. Notice, Investor II now has 58 more shares than at first)
Oops! The stock drops more. Investor sells 1058 shares * $.80/share. Gets $846
The stock drops to $.75/share. Buys 1128 shares for $840
Oops! The stock drops more. Investor sells 1128 shares * $.70/share. Gets $789
The stock drops to $.65/share. Buys 1213 shares $789.
Oops! The stock drops more. Investor sells 1213 shares * $.60/share. Gets $727
The stock drops to $.50/share. Investor buys 1454 shares for $727.
Now, let’s see the difference.
Investor I held 1000 shares and is now 'down' $500.00. Investor II bought and sold the whole way, and is now down $273.00 AND owns 454 more shares than Investor I.
Here is the real beauty. Investor II will break even once the share price reaches $.69/share. Investor I has to wait until the stock reaches $1.00 again. This means, Investor II can sell shares at a PROFIT long before Investor I ever breaks even!
Plus... once the stock reaches its target, Investor II reaps $2,908.00 while Investor I reaps only $2,000.00. This is nearly TWICE as much profit.
Who ever wrote that....did a nice job....I tell people at work that and they tell me I'm stupid.
Example....I told a guy who owns 8,000 shares of "F" Ford motor company to sell it when it was at $11.25. He told me that he would lose $25,000 and he wasn't taking the loss...I tried to explain it to him and he called me STUPID. Now ford is at $7.75. He is now down an additional $32,000 and I'm going to print this out and give it to him.
I bet he still calls me STUPID....LOL.
Posted by R1 Man on :
I think there is a time to do it and not to do it. Penny stocks are usually a NO NO in my experiances. Nasd, AMEX, NYSE.....you can usually make out ok on them. I sometimes average down but only if the stock takes a serious dump in 1 day. Only because I'm looking for the bounce side. But for those who think a stock dumps or is SHAKEN up like Pital says......they don't usually make it back up to the previous trading range.
Pital......Does it really matter who knows more about something???? Seriously......you sound like your crap smells like roses when we all know crap smells like crap.
Posted by kermit42 on :
I say maybe. Depends. The way I see it, every purchase must stand on its own, whether averaging up, down, or flipping, you should regard each purchase as though it were its own stock and only do it if it makes sense on its own.
Q: If you buy at .0015 and it drops to .0007, should you buy more?
A: Would you buy at .0007 if you didn't first buy at .0015?
If it bounces back to .0011 and you get out even, you still gain on the .0007 purchase and you still lose on the .0015 purchase. There is no significance to the fact that they were both same stock.
If you own a stock that's dropping and you think you might buy more at a certain level, is that a reason not to sell what you hold and ride the drop rather than dodge it?
Posted by R1 Man on :
You ALWAYS bail out if you strongly feel a stock is going to drop lower. Then you will learn if you made the right decision and if you did, you will be able to have more shares at a lower price.
However......I do agree with the fact that it should be looked at like a new STOCK PURCHASE. For the fact that now your trading outside of your norm...unless your like me and like flipping the beat down stocks.
Posted by Upside on :
Averaging down in the penny market is a losing proposition. More often than not you wind up with a boatload of shares that you'll never be able to sell for a profit. It is however a great strategy with NYSE and NASDAQ stocks. Watch for the 52 week highs and lows and act accordingly. If a stock has a range of 30.00 to 50.00 and you bought at 40.00, buy all you can when it dips below your purchase price. Barring any horrible news, the stock will hit its high again allowing you to cash in. The only thing though is that you have to have a longer term perspective, you can't expect these to run hundreds of percents in a few days. If you can accept that, you can make a good buck.
Posted by hedfe on :
If your playing a bottom play averaging down has been good for me at least, like swts I bought at .47 then averaged down twice that same day in the low .40s, then next day sold .52/.53
Averaging down is often good if your playing a short term bounce play, but buying a penny stock and then averaging down after holding a couple weeks or months is almost certainity going to be a mistake.
![[Big Grin]](biggrin.gif)