That's makes complete sense. If the stock that you entered has gone south and the prospects don't look good for a return, then cut losses and enter another that will get you good prospects. The question is, did the markets take your stock down (and others too), what factors changed? Sentiment, news info, sales, etc.?
The only thing with losses for me is, and yes, I know I'm Captain Obvious here, but...
The object is to make money, so anytime you take a loss, you need to double that, in order to make $.
Loss of $1000, puts you at -$1000. Then you need two trades (or one, yes I know) of $1,000 each to put you up $1000.
One step back = Two Steps up. Because I'm not in this to break even.
So, I try and really examine losses, and whether its better to avg down, or cut and move on. Because there are literally hundreds of great plays out there every day, and it may indeed be good to cut and move on.
These thoughts are just mine, not right, not wrong, just thoughts. Invest in what you believe in, not what I believe in. Do your research, and invest in the facts.
