posted
Question: is averaging down better then selling at a loss?
e.g. I buy a stock at .01 a week or so later it's .005
Do I buy more to average down or should I have sold it at a 30% or so loss factor? Let's add some factors - its OS is reasonable, chart looks good and the PR is all positive....
-------------------- Work Hard / Play Hard
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posted
I would say it depends on the particular situation. If good news is expected, reasoning for an uptrend, ect...then maybe average down. Bad news, increased shares, reverses, etc....then I would sell. Personally, I do not like to hold onto a stock. I would rather take the loss and buy into something else and try to recover my losses. I do hold a stock....every once in a while. If you average down, you might have to hold onto that stock for months...or even a year. So I would say neither one is better.
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posted
Also take into consideration that you have to ad in your commision fees...to average down...(what ever they may be)...so this would be in addition to your "loss"...will the stock "run" soon? Or will you need to hold it for a while? If you need to hold for a while..could be better to sell...move on to new stock and make your $ back...GLTY!
-------------------- #1 Rule: Protect your capital! #2 Rule: Never fall for the BS on the boards!
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posted
I am going to try something and I'll keep you all posted --
when ATVE makes me a few dollars I am going to take $1000 and set it aside to buy $500 of IGAI -and if it goes down I buy another $250 worth and if it goes down again buy $150 worth and if it goes down again buy $100 worth and if it goes down again I am going to cry :-))))) In fees it would cost me $40 -- if it goes back up to my first buy in I am get that back and much more ---I can't believe I posted this :-)
quote:Originally posted by 10of13: Who is that? Upsteamtrendahead?
Good one 10 -- I like it -- I suppose I should have tracked down my password so I could use steam at work as well eh? But Upward Trend is catchy -- :-)
Tex - the averaging down may be a necessary evil for me, every time I buy a stock at what I think is the "right time" the PPS goes down 8 times out of 10. This is a desperation move of sorts I think.... After all, 10of13, didn't you make some cool cash on IGAI doing something similar?
posted
No offense to anyone on this board.. but averaging down is the most stupidest strategy in trading there is next to not having a stop/loss mental or otherwise.. if the true pro traders do not average down what makes us think it is a good move? ... remember these guys are pro traders and make millions per year for a reason.. and its not because they average down... i will always take my loss and find another stock to recover what i lost in terms of $$.. averaging down to me is equivalent to playing a pair of deuces in 7 card stud poker with no kicker as opposed to playing a pair of kings with a ace kicker on 3rd street... hope this makes sense.. for you non poker players...
-------------------- Let the world change you... And you can change the world.
posted
Averaging down - not a good idea for 'traders' at all.
Very good device for long-term investments, yet still discouraged by 'experts' for whatever reason.
My thoughts on it, for what it's worth... If I waited for a good entry pps and the stock loses value, I have to look at what caused the pps drop.
Did I buy in on hype, bubble frenzy? Let it go, more money would not improve the position.
Were there major shifts in the company structure, financing, industry? New analysis would be needed before making a decision to average down or sell at a loss.
If it's the same company, only lower pps, and you would still buy in, then that's the time to average down. There are too many 'forces at work' affecting the pps (including manipulation) to base a decision on anything else.
quote:Originally posted by 10of13: Who is that? Upsteamtrendahead?
Good one 10 -- I like it -- I suppose I should have tracked down my password so I could use steam at work as well eh? But Upward Trend is catchy -- :-)
Tex - the averaging down may be a necessary evil for me, every time I buy a stock at what I think is the "right time" the PPS goes down 8 times out of 10. This is a desperation move of sorts I think.... After all, 10of13, didn't you make some cool cash on IGAI doing something similar?
A little different...it was more of a flipping...not really averaging down...
In my head when you are avaeraging down...it means you are purchasing more shares at a lessor price...and then you would have "averaged" at a lower PPS...but I sold the IGAI at a higher amount...and bought it back at a lessor amount...
I agree that the "averaging down" is for when you are staying in a stock longer term...but with the "day/swing trades"...i don't really see the point...sell at your loss and take the money and play another stock...to get back your losses...
-------------------- #1 Rule: Protect your capital! #2 Rule: Never fall for the BS on the boards!
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posted
great advice folks -- and Ticktrader is right on when he does an analysis as to why it went down when all our stocks are supposed to go up once we buy them right? :-) ---
So here's an example with IGAI --- I bought at .017 a long time ago and sold at .019 a long time ago since I was growing impatient with it (and look at it now) ----
And a dear friend of mine bought at .16 and still holds it --- and it now sits at what - .0074 or something like that...
when should she have sold? A stop loss - at what percentage?
posted
the only thing that "concerns" me with the "automatic" stop losses are that some times with the way that MM's play the game...they can actually "take the PPS down" and "grab" all the stop losses that are set...before they run it back up...so i only use the "mental" stop loss...not sure what to suggest if you aren't near a computor during the day...
-------------------- #1 Rule: Protect your capital! #2 Rule: Never fall for the BS on the boards!
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quote:Personally, I don't "buy" the idea of averaging down. Smacks of good money after bad, to me.
That's exactly what it is, good money chasing bad. It's a sound investment principle when your playing NYSE or quality NASDAQ stocks, buy low, sell high, but typically the penny stocks have a run and then do nothing but fall for months or years. You could wind up averaging down to nothing and losing everything you invested. Much better to do as 10 of 13 suggested, set a stop loss in your mind and bail out if it hits it. It might hurt a bit to lose 10 or 20% but it's far better than to be stuck with a go nowhere stock that has no chance of recovery.
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quote:Originally posted by pennyman33: I think 20 percent loss would work good for a stop loss. I wish I had set that myself when I first started.
20% is kind of high for a stop/loss ... i think anywhere between 7% to perhaps 10 or 15% is good enough... best way to come up with a % for stop/losses is to ask yourself this question: How much pain can i take? ... so this question is applicable and as someone already pointed out MM's like to push a stock down to hit the stop/losses... make it big so they dont hit yours with their game but not so big that it will hurt you in the long run...
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