8.5% in 2 months

[imjohn]

No dog in this fight one way or another - but can you point out even a single stock that's done that? I.e., lost 50% of its value "in a slow steady fashion" without reverses?

Hey BWS, not looking to defend my opinion on the matter. Was just providing the OP a solicited opinion on his proposed strategy.

I don't consider a sub-$5 stock losing $1 of value over a span of weeks or months without any +$.10 up moves along the way, to be a rare event. But, I haven't looked at any charts for sub-$5 stocks in the last couple of years, so I wouldn't know with certainty if the potential scenario I thought up has happened at any point in that time.

May be wrong or may be right.

 

[BlueWaterSailor]

I don't consider a sub-$5 stock losing $1 of value over a span of weeks or months without any +$.10 up moves along the way, to be a rare event. But, I haven't looked at any charts for sub-$5 stocks in the last couple of years, so I wouldn't know with certainty if the potential scenario I thought up has happened at any point in that time.

Given that price movement in stocks is generally stochastic, I find the idea of it being "not rare" really odd. Volatility on a continuously falling stock is going to stay under 5% for weeks or even months? Seriously? I'd be willing to put some money on one or fewer occurrences in all of market history.

But since without such a bet I'm not going to put in the time to scan for anything like that, we'll just leave it at "different opinions."

 

[ElectricSavant]

It works until it doesn't...been there and done that!

Just looking for opinions on the strategy that I have been trading.

Now, its not real trading per say, and I am doing what everyone tells you not to do, average down.

I am doing this on two stocks that I believe in and want to hold long term, so when the stock is falling it does not phase me.

One stock is between $2-$3 and the other between $3.50-$4.50

I have buy orders at $0.10 intervals all the way down for 1000 to 1500 shares each. As soon as the buy order is filled, I then enter in a sell order $0.10 away. So each time a sell order is triggered, I bank $100 or $150 minus commish. Most days a few sell orders are triggered, as stocks move sideways most of the time.

With a total trading capital of $70K, have made $6500 in 2 months. I am not concerned with the overall value of the account, only what income is generated.

The risks I see doing this are:

-The stock goes to zero and all capital is lost
-The stock increases in value and more capital is needed to generate same return
-The stocks volatility decreases

Thanks

 

[imjohn]

Given that price movement in stocks is generally stochastic, I find the idea of it being "not rare" really odd. Volatility on a continuously falling stock is going to stay under 5% for weeks or even months? Seriously? I'd be willing to put some money on one or fewer occurrences in all of market history."

Hear ya, guy. When you phrase it that way, I'm inclined to agree that I'm absolutely wrong in my statement, and haven't thought it through.

I have some bias against the proposed strategy, as I attempted a similar one to what the OP suggested and got absolutely buried towards the end of that particular leg in my trading journey, so I was focused on expressing a hypothetical worst-case scenario.

I don't view my trading opinions to be worth betting on... Or worth much of anything to other people. So I try to never throw them out unsolicited.

 

[ironchef]

Hear ya, guy. When you phrase it that way, I'm inclined to agree that I'm absolutely wrong in my statement, and haven't thought it through.

I have some bias against the proposed strategy, as I attempted a similar one to what the OP suggested and got absolutely buried towards the end of that particular leg in my trading journey, so I was focused on expressing a hypothetical worst-case scenario.

I don't view my trading opinions to be worth betting on... Or worth much of anything to other people. So I try to never throw them out unsolicited.

You have my respect for that.