Sorry to hear people's experiences here.
always use a stop and enter it when u buy!!!!!!!!!!!!!!!!!!!!!
never, ever, ever average down..
money is made buying new highs, selling new lows and buying confirmed trend changes..
not in consolidation: it ties up your $ and u get trader fatigue..
STOP BY: GARY B
Here's another way to look at averaging down, taking the approach of suggesting what to do (as opposed to suggesting what not to do).
If you already have a position in a security and are considering buying more, look at the prospective purchase as a separate investment. If you believe the separate investment will make money, it's worth considering, regardless of the fact it would result in averaging down.
Averaging down can reduce the average loss per share, and that feels good. But the problem is that averaging down may increase your total loss.
If you buy 100 shares of ABC at $2.00, you've invested $200. If it then drops to $1.50 and you buy 100 more shares, you've invested $150, for a total investment of $350. Your cost per share has dropped from $2.00 to $1.75 (averaging down).
What if the price continues to drop, and when it reaches $1.00 per share you decide to sell?
If you wouldn't have bought the second lot of 100 shares, your loss would have been $1.00 per share ($2.00 - $1.00), for a total loss of $100.
Because you averaged down, your loss is only $0.75 ($1.75 - $1.00) per share, which feels a little better. Unfortunately, your total loss is $150 ($350 - $200), a 50% greater loss than if you hadn't averaged down.
Looking at your second purchase as a separate investment -- you bought 100 shares at $1.50, then sold at $1.00, for a loss of $50.
Good point. Averaging down is for gamblers that can't face up to the truth they are losing period! If your position ain't making you money the last 3 to 6 months, your missing a BOATLOAD of other opportunities in the market. Glad I bought ACAD when it was @ $2.50 when an article touting its latest clinical trial showed promise, to me that was the ticket to buy long term look at them now!
PoP cherry Pop!!
I agree with this view point. However, you have to also have a deep understanding of what you do buy in first place and assign a investment time horizon to it. You have to have some empirical evidence that this company will ultimately succeed in this time frame....for example, Augme is proven as the best in the industry platform for mobile advertising by reputable third party. Furthermore, it is in mist of an explosive industry that is yet at its infancy stated and researched by ALL technology research firms. As such the current price for such fundamental and specially when they do hit positive CF in 2-3 months should give you the confidence that today's investment will be highly successful and if you buy additional shares today its profits will more then cover what you have purchased at some point relevant to your entry point initially. This is the game that we must play with such high beta stocks. If you don't have a deep understanding and knowledge of what you have bought initially that your emotions will take over and make a bone head move of selling at a loss. Patience in "investment" is key....look at buffet...he buys value and sits on them until the market realizes what he sees. The market has not realized Augme or better yet Hippcricket. It has seen some serious fouls by the previous management BUT what it always does is to throw the baby out with bath water. Hence the fundamental of this company is not realized in this current price. So again, patience and total focus on the fundamental of this company will bring about success no matter what price you entered originally if you have the fortitude to play the "game" correctly. Otherwise, you will most likely get back your money at some point if the company stays on its own but if they get bought those who played the game well will leave the table smiling.
Your damn right Gary! Any smart and prudent investor, if he/she is an investor that is not a GAMBLER like Billy and many $ chasers here get burned!! I can almost guarantee you that this is not their first time they all got burned. It's a pattern they can't get out of. Gary your right, the signs of a major downfall was written all over and yet they all missed it! LOL! Hahahahahha!! Too funny!!
Gary, I have a rule for you. You should never make a blanket statement or a one size fits all rule.. are you the federal government? We know how those rules turn out.. everything should be looked at specifically, not in generalization... your rule about not averaging down could be right most of the time, but I firmly believe it is not the case in this situation.. that being said, if you have the foresight and the open mindedness to look at this situation, as others here have done, you could be looking at a once in a lifetime opportunity at 40 cents per share.. as I said, you are probably right most of the time, however, if you can be all over the one that "slips by the goalie", you would be laughing all the way to the bank.
On a stock that has dropped 94% from its high, a company that still burns money, a company that is maybe the smallest player in a giant field full of giants, yep you might be right in betting against time honored rules :) I am sure there are many that had a cost of $3 and bought in heavy at $1 to buy down.
So far given the price drops there have been scores of millions lost in this stock by investors.
We have not seen the bottom. I called 42 cents almost 2 years ago, and I am now calling the next bottom at 25 cents. This is going to be my buy in point.
40 cents is a suckers bet.