posted
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
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
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
-------------------- No longer eligible for government service due to lack of tax issues.
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posted
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.
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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.
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posted
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.
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posted
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?
-------------------- Me Trade Pretty One Day.
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posted
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.
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posted
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.
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posted
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.
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