posted
how exactly can i figure out what my average buy price is. for example, let's say i buy 100 shares of X at $16.40. then it goes down to $14.50 and i buy another $100 shares. i take $16.40 minus $14.50 and i get $1.90. divide that by 2 and i get $.95
so i take $14.50 + .95 = $15.45. is that correct?
thanks.
Posts: 353 | From: Bay Area, CA | Registered: Feb 2004
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posted
There are two other ways you can arrive at the same answer. Add your share puchase prices together $16.40 + $14.50, then divide by 2, gives you the average price of $15.45
Or, take the money spent which is $3090.00 and divide by the number of shares which is 200, and you get the same $15.45
I hope this helps.
Posts: 20 | Registered: Dec 2004
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snappy first answer is correct only if the number of shares are same in both transactions
Posts: 210 | From: tampa, fl, us | Registered: Nov 2004
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posted
machiavelli-- i'm not arguing, but just wondering why you say that? it's a common strategy for a bad call... i'd really like to know... thanks
Posts: 229 | From: new mexico | Registered: Apr 2005
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posted
I agree with Mach and Tex on this one. Years ago in 2000 I lost everything on those tech stocks. I averaged down to nothing. The stock may bounce often but what happens when it tanks and never goes up again. Eventually youl get put in a bad situation. You may average down succesfully often but eventually youl loose everything or at least a large chunk of your portfolio. As you say, it is a common strategy for a bad call. If you want to make a bad call this is a common strategy. If the stock drops a lot and is trending down logic says it will most likely keep going down. If you played pocker and got a bad hand and lost money because you didnt fold. If you got another bad hand would you bet big to make up for the money you lost or wait till you got a good hand and then bet big. A stock going down is a bad hand unless you short it. Averaging down is like refusing to admit that you made a mistake. Wouldnt it be better to find a stock that at least looks positive. qbid is a good example of averaging down. I saw one person has put over 40000 into qbid and it keeps tanking. everytime he gets more money he puts more in and it keeps tanking. Why not just wait till its done tanking or at least gives some signal that maybe its done and then buy. That stock may go down to .0003 or less. who knows.
Posts: 205 | From: ca | Registered: Aug 2005
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posted
Tex and Tree have said what I was already going to say... I'll say it differently in terms of Poker because im also a poker player (though i know Tree has already done this as well).. Averaging Down is tantum to playing every starting hand you get in 7 Card Stud... once in a blue moon you will hit and get the Nuts and win the hand.. but that one Win will not make for all the losses of the garbage hands you play... why would you play a pair of deuces with a 6 card for a kicker when you have a much better shot with a pair of queens with a King Kicker to make a big two pair then a small two pair that will most likely get beat... anyways Averaging down is nothing more then HOPE.. Hope that the stock will eventually go back up so you keep buying low just simply because you can buy more shares at a lower price... but that is nothing more then pure gambling ... chasing "cards" so to speak with a pair of deuces with a 6 kicker to the river and "hoping" you will win.... while the MM's will have those pair of queens with a King kicker and more likely then not beat your hand... instead of averaging down look for a better stock that is basing and is about to break out of it's Resistance... take the gamble out of your game (trading) ... put the odds in your favor with TA and some FA and stop/losses to go along with it.. the Qbiddians are stuck in their stock because they keep averaging down and it's not doing anything for them... instead of cutting their losses they are HOPING it will go up... instead of playing every starting hand you get look for that pair of Queens with King Kicker... it's out there somewhere.. you just need patience... that is the one problem with so called "traders" on this board and other boards in the internet.. they need to trade everyday or have some stock in their accounts.. they do not have the patience and disclipine of a professional gambler (especially like the pro poker players) to wait for that one good starting hand to come along.... they keep playing garbage after garbage starting hands chasing "cards" ... practice patience and disclipine and you will beat the game in the long run... hope this helps and that I make sense in what I am saying to you...
-------------------- Let the world change you... And you can change the world.
Ernesto "Che" Guevara de la Serna Posts: 4669 | Registered: Mar 2004
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posted
thanks BUYTEX, TREEMONEY & MACH--- i see what you mean... i agree, hope is an enemy in this context and too many people play this way... best to take the loss and not chase.... i've limited my use of it to situations where i'm real sure of support level and i just want to be able to get out earlier with a breakeven, like with a channeler, or where i blew the run and i figure the next run is a long way off... got to re-think this now 'cause you guys are right- it ties up capital... thanks again
Posts: 229 | From: new mexico | Registered: Apr 2005
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posted
I disagree sometimes avergeing down is a good idea, E.G: I recently purchased 25k worth of ICMH at .0022 yet it seems to have bottomed at .0012 now. Wouldn't it be wise to pick up 175k more and lower my averge to .0013 and as soon as there is any up swing in pps sell. I do agree one must be carefull and make sure that what your buying has hit bottom .
Posts: 181 | From: Quebec | Registered: Aug 2005
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posted
Averaging down in pennystocks is not a smart move.. in mainstream stocks maybe but not pennystocks... ICMH was a fluke to you...don't think that you can average down stocks on a consistent basis.. it would be much better to buy on the dips and sell on the rallies without averaging down...
-------------------- Let the world change you... And you can change the world.
Ernesto "Che" Guevara de la Serna Posts: 4669 | Registered: Mar 2004
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posted
Averaging down is a tactic that an investor would use, not a trader. If you made one bad decision as a trader then let it go at that. Use stop loss orders so you do not lose too much with pennies and go on to the next stock. If you are consistently losing money then you should stop and reevaluate your strategy. Paper trade with different techniques for a while until you find something that works for you. Email me if you would like my opinion of trading. If you are an investor (holding long term) then averaging down may not be a bad idea. Just dont put all your eggs in one basket. If you are a trader and are completely convinced that the stock has hit bottom then give it a shot and average down, but as posted above more times than not it is not a good idea. Some firms do not allow you to stop loss on pennies. Good luck.
Posts: 539 | From: BIG D | Registered: Apr 2005
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