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

[ironchef]

real trader uses stop...no if or but. we are not investor. if u got stop out...it means many things: that you are wrong aka not trending, you didn't account for the volatility of the stock at that point in time, your position sizing etc.

and to answer the op original question. i think you already know what you did wrong, otherwise you won't title "major loser." you are feeling guilty and trying to ask a real trader to give you justification for you to stay with this loser. but i think you are mistaking this forum for some other investing forum. sorry...you didn't plan when bought this loser by asking what if you are wrong and what is your exit point? you came into the trade thinking about how much you going to make and not have much you going to lose? noob trader mistake 101. that's all i got to say.

Not disagreeing with you, but OP said bought since November, or 4-5 months ago. So, he is really not a trader.

Took a long position last November in a company I believed in (and still do).

That is not really the mindset of a short term trader. The question is since OP believes the fundamentals hasn't change, what should he do?

The hardest thing is when everyone says you are wrong, do you still have the conviction to hang in there or even add to your position? I mentioned 2008-09 because those who went against the herd would have done very well since.

Of course the next hardest is to admit you are wrong and get the hell out.

 

[vincentnyc]

Not disagreeing with you, but OP said bought since November, or 4-5 months ago. So, he is really not a trader.

That is not really the mindset of a short term trader. The question is since OP believes the fundamentals hasn't change, what should he do?

The hardest thing is when everyone says you are wrong, do you still have the conviction to hang in there or even add to your position? I mentioned 2008-09 because those who went against the herd would have done very well since.

Of course the next hardest is to admit you are wrong and get the hell out.

That’s why I told him he is confusing this forum with an investing forum. He is asking the wrong crowd for advice.

 

[zghorner]

real trader uses stop...no if or but. we are not investor. if u got stop out...it means many things: that you are wrong aka not trending, you didn't account for the volatility of the stock at that point in time, your position sizing etc.

and to answer the op original question. i think you already know what you did wrong, otherwise you won't title "major loser." you are feeling guilty and trying to ask a real trader to give you justification for you to stay with this loser. but i think you are mistaking this forum for some other investing forum. sorry...you didn't plan when bought this loser by asking what if you are wrong and what is your exit point? you came into the trade thinking about how much you going to make and not have much you going to lose? noob trader mistake 101. that's all i got to say.

I agree with this completely. I admit I am a noob to both trading and investing and have much to learn.

 

[murray t turtle]

The problem with stop is I got stopped out on good and bad stocks indiscriminately. I was stopped out of FB @ $20, AAPL @ $400 (before 7:1 split), BABA @ $100 ...

If I took Handle123's Sears chart, I can superimpose BAC, WFC, XOM... they all had sharp drops in 2008/09. So, I would be stopped out on all of them. If you bought 10 stocks back in 2008/09 including GM, Sears, C, WFC, BAC, JPM, XOM... some went belly up but those that survived would make you very well off. Imagine, bought BAC @ $2.6 and WFC @ $8.0?

%%
Actually i got something out of Timothy Sykes e book; so i bought his paper book- but not buying penny stocks.Penny stocks can be much worse than using leverage-TQQQ almost certain, never goes to zero.
Have to use stops for trading; dont have to use stops on SPY stuff/ETfs or mutual funds, Even an underperformer like DOW/DIA will kick out a GE before it hits zero/pennies

 

[murray t turtle]

Not disagreeing with you, but OP said bought since November, or 4-5 months ago. So, he is really not a trader.

That is not really the mindset of a short term trader. The question is since OP believes the fundamentals hasn't change, what should he do?

The hardest thing is when everyone says you are wrong, do you still have the conviction to hang in there or even add to your position? I mentioned 2008-09 because those who went against the herd would have done very well since.

Of course the next hardest is to admit you are wrong and get the hell out.

%%
Its going up now + has been. But to trade single stocks ;seldom if ever pays to keep ignoring 50 or 200 day moving average. ELITE TRADER is a trade/short term investing web site. The worst thing about trading is when you follow a good plan+ exit; it can still reverse+ wind up profitable.
Actually ,even with investing have to manage risk ; its just easier-not with single stock , but ETFs[Edit note so called value/lower price stock managers can do well, but they seldom beat S&P 500. I had an oil stock get so close to my stop, like dead money; sold about 80%] In that case good thing i kept a much smaller position on , it did do well for an oil stock.S&P500 has about 5% enegy, QQQ has none unless they changed lately]

 

[DannoXYZ]

Several ideas I'd like to point out to OP, which is to use more sophisticated strategies.

Most of us know about putting away money for rainy days as protection. Most of us buy homeowner's insurance, we buy auto-insurance, even life-insurance. It takes away capital we could be using to make money. Why do we do it? Because it's a hedge when things unexpectedly go wrong against our plans.

Same thing with investments. It's obvious in this case things didn't go as planned. As an "investor", you should be less concerned about predicting trends like traders, and spend more time devising strategies that are profitable regardless of how your "investments" turn out. One way to do that is to buy insurance on your long positions. Whenever you open a long stock position, buy an out-of-money put as insurance (target ~5% of long position). You can also sell out-of-money call to offset cost of insurance. Now with insurance in place, over the same 4-5 month time-frame, you'll be 10-20% up in profits regardless of which way the "investment" moves.

Which brings up idea of opportunity cost. What else could your money be doing during this 4-5 month time that you're sitting on losing position? There's at least a thousand other stocks you could've been in that's going up instead of down. Month after month you could be in some other stock that's gaining. Follow Buffet's philosophy if you must (I actually worked for one of his companies in S.F.), who say to get out of non-profitable positions quickly and pile on more into profitable ones.

Even Buffet has revised his fundamentals approach and have recently said that tech-stocks presents a valuable opportunity for profits.

 

[ironchef]

%%
Its going up now + has been. But to trade single stocks ;seldom if ever pays to keep ignoring 50 or 200 day moving average. ELITE TRADER is a trade/short term investing web site. The worst thing about trading is when you follow a good plan+ exit; it can still reverse+ wind up profitable.
Actually ,even with investing have to manage risk ; its just easier-not with single stock , but ETFs[Edit note so called value/lower price stock managers can do well, but they seldom beat S&P 500. I had an oil stock get so close to my stop, like dead money; sold about 80%] In that case good thing i kept a much smaller position on , it did do well for an oil stock.S&P500 has about 5% enegy, QQQ has none unless they changed lately]

Thank you for your coaching.

I don't put stops on my long term stock holdings because I don't expect to sell them. I do have stops on all my short term option trades now, thanks to folks like you sir.

No automatic hard stops though because options on the equities I trade have mile-wide bid-ask. I would lose my shirt if I end up buying on ask and selling on bid.

 

[murray t turtle]

Thank you for your coaching.

I don't put stops on my long term stock holdings because I don't expect to sell them. I do have stops on all my short term option trades now, thanks to folks like you sir.

No automatic hard stops though because options on the equities I trade have mile-wide bid-ask. I would lose my shirt if I end up buying on ask and selling on bid.

%%
Amen ; i dont use stops on ETFs.I may buy on ask or bid ; but exit is usually on market order!!
Brokers/marketMakers /specialists LOVE me LOL, BUT i never panic sell ; planned sell?? Sure

 

[taowave]

Here is your real problem..You are punting...From what I can tell,you havent formulated if you are a value investor or a growth stock trader. You bought in around 90,and havent mentioned any particular set of metrics that made the stock attractive.Now that you are down close to 25%,you are considering averaging down. Do you now find the stock attractive on a P/FCF basis..EV/EBIT?? Price book,yield?? Its pretty clear you arent a growth/momentum investor.You are trading on emotion with no method,no plan...If you are going to average down,it should have been part of your "money management" from day 1 assuming you are a value trader..

 

[vincentnyc]

Here is your real problem..You are punting...From what I can tell,you havent formulated if you are a value investor or a growth stock trader. You bought in around 90,and havent mentioned any particular set of metrics that made the stock attractive.Now that you are down close to 25%,you are considering averaging down. Do you now find the stock attractive on a P/FCF basis..EV/EBIT?? Price book,yield?? Its pretty clear you arent a growth/momentum investor.You are trading on emotion with no method,no plan...Thats not going to work

did you even read what he wrote? he invested in the company cause he used to work for the company and know the company. that's the problem with investor with nowaday they fall in love with a company...they think they know the company cause they either read about it or use to work there and just invest based on their emotion. he ain't even doing fundamental value investing or whatever the hell that is. i'm a trader. I trade base on looking at chart and enter/exit on a signal. i don't care if you the greatest company in the world, if i look at chart and your stock prices keep going down down down...no way in hell will i put my money in it unless for probably day trade or scalping.