Need Advice on A Position (Major Loser) Dollar-Cost Average?

[lindq]

I am serious about becoming a better trader and researching every day educating myself to get there.

There is really no way to rationalize letting a trade turn into an investment. It is always a bad idea.

That's why God created stops. One of his better ideas.

In your present circumstances, you are looking at a terrible chart that calls for selling, not buying. I would take your licks and move on.

 

[Option_Attack]

Edit: Deleted my post about writing ATM Dec calls. Personally it would drive me crazy looking at that loser trade all year. Good luck and good trading to all.

 

[murray t turtle]

Took a long position last November in a company I believed in (and still do). It is an oil and gas company named Cimarex Energy (XEC) and I have worked with them off and on since 2010. I bought 220 shares @ $90.58 for a total investment of $19,928 and it has basically steady dropped since my purchase to a current price of ~$70. I bought in because I saw them with my own eyes making good decisions...they have smart management and have always held a great reputation in the Oklahoma Oil Field.

I have started this thread for your "Elite" opinions on my position. I plan on keeping it for the long run but am open to suggestions. I am considering buying more shares while the price is down to average out but undecided.

thank you in advance for the advice, I know these types of questions might be annoying to some of you seasoned traders and I appreciate your time. I am serious about becoming a better trader and researching every day educating myself to get there.

%% They're selling it on most time frames ,Zhorn/long horn. And again its below 200day moving average. 52 week range, oops, its in bottom half. SPY has done about 12% YTD; but they're only weighted 5% in energy. Me;I want a good dividend for stock investments; but its a sell on 200day moving average ,50dma.

Pays a good dividend+ up 12.55% YTD+ better stock than TSLA. If i missed the 2oodma/50 dma sell/ pull the trigger@55 area.It could turn or go DOWN to $6.66 as GE did .........Thats a fun sector, black gold ,TX TEA; but it cycles, like XOM Tillerson noted..............................................................................

 

[formikatrading]

Have you considered you might be a victim of confirmation and familiarity bias?

 

[nooby_mcnoob]

You can't fix this aside from getting out or just HODLing but the only thing you can do is fix the next time. As others have mentioned there are ways to protect your investment and/or reduce your cost basis:

1. Stop loss
2. Buy protective puts
3. Sell covered calls

 

[DepthTrade]

Thanks for the comments thus far everyone. I planned on this being a long hold at purchase time and admit that because of my commitment and belief in the company I did not set a stop loss or even have an idea in my head of a % drop that I would exit. In my mind I planned on selling as soon as it neared $100 again no matter what duration. Lesson learned the hard way.

You did have a plan when you entered, that was to buy and hold. Now that it has dropped you're having 'Buyers remorse'.
Stick with your original plan. You may not remember, but you had to have thought price could drop. If you get out now, you'll be devastated when it climbs back up.
This is not a trade, it was an investment of your choosing.

 

[ironchef]

Took a long position last November in a company I believed in (and still do). It is an oil and gas company named Cimarex Energy (XEC) and I have worked with them off and on since 2010. I bought 220 shares @ $90.58 for a total investment of $19,928 and it has basically steady dropped since my purchase to a current price of ~$70. I bought in because I saw them with my own eyes making good decisions...they have smart management and have always held a great reputation in the Oklahoma Oil Field.

I have started this thread for your "Elite" opinions on my position. I plan on keeping it for the long run but am open to suggestions. I am considering buying more shares while the price is down to average out but undecided.

thank you in advance for the advice, I know these types of questions might be annoying to some of you seasoned traders and I appreciate your time. I am serious about becoming a better trader and researching every day educating myself to get there.

Checked the company fundamentals. Looks like after 2016 low revenue, it is growing again. Cash flow is a concern but it recently filed to raise $500M, 10yr note. If successful, it will solve near term cash. So I think the Dec low could be bottom. Quoting @murray t turtle: Not a prediction, just a speculation from an amateur mom and pop retail.

 

[Metamega]

Unfortunately, no matter how great the company is, oil isn’t in a great spot and oil and gas stocks are highly correlated to their the commodity prices. Some of the large integrated companies are less correlated but their also large non volatile blue chips for the most part.

If you bought it as an investment, perhaps it has a decent dividend, then perhaps it’s not the worst idea to hold if you think they can weather low oil prices.

If you bought it as a shorter term trade then the best bet is to exit. Entering trades is easy, exiting is hard so you need to plan out when your going to exit before you even enter the trade. Time to hold, target price, trailing stop maybe, hard stop, scale in/ out points. Much easier if you have a plan before hand then trying to do it on the fly with emotions behind the decisions.

 

[smallfil]

You did have a plan when you entered, that was to buy and hold. Now that it has dropped you're having 'Buyers remorse'.
Stick with your original plan. You may not remember, but you had to have thought price could drop. If you get out now, you'll be devastated when it climbs back up.
This is not a trade, it was an investment of your choosing.

The problem with that is you could end holding for a long time trying to breakeven. This is my story when I started getting into the stockmarket. Remember the dot com boom. I made $25,000 on EMLX and TLGD then, hell, I felt rich. Went to Las Vegas multiple times, treated my friends to lunch at a Japanese buffet, I took about 60 friends in all. It cost about $18 a piece then, not counting the drinks and tips. Bought CSCO then, at around $120 if I recall correctly. I had 200 shares of it. That was around year 2000? Now, 03/15/19, CSCO closed at $53.20. So, about 19 years later, assuming I still had those shares today, I would still be sitting at 55.66% loss and still waiting to breakeven. If you have 50 years to wait, maybe, you will get lucky to breakeven. Take note, you can also, lose more monies while, waiting and be deeper in the hole. Now, I am a trader and use risk management on all my trades including, stop losses, exit rules. Warren Buffett, started early when he was very young, bought his stocks near the bottom. Very few people can actually, do what he did.

 

[JigsawTrading]

Thanks for the comments thus far everyone. I planned on this being a long hold at purchase time and admit that because of my commitment and belief in the company I did not set a stop loss or even have an idea in my head of a % drop that I would exit. In my mind I planned on selling as soon as it neared $100 again no matter what duration. Lesson learned the hard way.

This is flawed reasoning.

Just because something has been at a price before, does not mean it will again. This is a psychological heuristic called anchoring.

I had a friends and his wife come & chat with me once at a party, they had a disagreement about an 'amazing investment' he wanted to get into. There was an oil ETF that had gone from $32 down to $1.20 and her husband wanted to load up on it because he was focused on the possibility of a return $32. My initial response to them both, on hearing the story was "if it went from $32 to $1.20 - it's sh*t". Not exactly trading genius. On investigation, I did indeed find it was as I suspected.Fortunately they stayed away.

Looking at your stock - sales & profits are increasing, debt is going down, cash position is OK. Looks solid - but none of that means it's under or over valued. It just means it's viable.

Perhaps it's just that oil prices are at a low and this is knocking on to your share price.

With this in mind - how do you personally decide what factors you will base your decision on? Or what your target price is? I mean - how do you decide that it's not likely to go to $50? If previous price is the only factor in your decision making, you are guaranteed to be always buying things that are on their way down, right?