Replies to post #70215 on $heff's $tation of $tocks & $olid DD

[$heff]

OT:..That is a tough call for sure & a challenge for any trader. I will oftentimes have a hard rule of 10% even though I have broke it thus far with CYTK. Probably because I know the Sept 3rd catalyst is near. Last year I threw money at a sinking ship in EXEL and lost $50K. I did not do my homework and did not see the pattern of huge volume selling on consecutive days. When I called to inquire and the IR guy would not answer my question that should have been a red flag. I continued to throw money at it because I was in the red and wanted to "avg down." The company did an offering at a huge discount and I got crushed. I posted the trade for everyone and discussed what I had learned. Now I just try to have patience and add with more thought given to why I am adding instead of just trying to average down. Sometimes that means picking up the phone and calling the company. The key is to know what you own and try to make the best decision possible based on the information you have so you don't make common sense errors that can cost you a lot of money. That is just my experience & thought from a bad trade I had.


Message in reply to:

OT: The decision between cutting losses and moving on, or doubling down on a stock is one of the hardest for me to make as a trader. I know traditional wisdom is that if your initial fundamental reason for investing in the stock hasn't changed, then you should average down. However, I've learned from experience that no matter how far a stock has fallen, there is always room for it to fall more. If anyone is interested in sharing, I would be very interested in finding out how you go about making this decision. Thanks everyone.

[Clem326]

O/T Difficult topic for us all I believe. Here are some questions I often ask when making this decision:

Is there any news? (Twitter is a great source for news and to see if there is a spammer/pumper involved.)

Has anything changed with the company or catalysts?

Whats happening with the market? Is this stock just down because the market is down? Careful here as some stocks love to oppose the market trend. Always fun to add when the market pulls back and nothing has changed with a stock. Also I tend to add in small percentages. For example...2% drop add 20% to position.

I have typical percentages for losses, gains, adds and stops with each position.

There are times when I will not add because something changed. I am not willing to increase my risk but still hold the stock.

Greed and fear are big drivers for the market. Patience is often the key.

Of course this is all JMO.

Happy Trading.

[pmony5]

O.T. The biggest mistake I see young traders make is entering a full position in one shot or 1 day.... NO one can call a perfect top or bottom so first allocate a proper % of your portfolio that you want to own of a stock ( No Texas Holdum All In's ) then buy 20% of that full position you desire, be patient do DD, check message boards, filings & most importantly spend a few days seeing how it trades, add in small pieces over weeks not minutes. The stock may start rising but I would rather avg up then down. Once in a full position use proper discipline of 8 to 10% drop from your completed avg price = sell no excuses... If the story changes for the worse regardless sell ASAP.... You must always use good discipline to protect your capital without $$$ = no tools to make money.....By utilizing these & other strong disciplines it takes the emotion out of trading & allows for clear thoughts. On winners let them run & use a trailing stop as the shares keep rising move your stop up....Hope this helps & remember every day we get new opportunities so getting trapped & refusing to take losses is a poor choice & waste of valuable money making time....GLTA & make $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$