The concept of house money, selling half when the price doubles and letting it ride..

HolyGrailSeeker said:
You sell half of the stock/crypto when the prices double and then what you are essentially left is termed "house money"

If someone has employed the house money strategy before I would like to hear your thoughts and how
did things work it. Would it be better just plain not selling or better yet to trade it?
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You mentioned crypto... I do not think it's a good idea to do this with a high volatility asset, you'll end up cutting your winners too early

There's a video I posted a while back of Dan Tapiero discussing that most retail investors (traders) are unsuccessful in trying to time entries and exits for bitcoin and other crypto assets

I think it's better to have targets of what you're looking for in a trade/investment and stick with it. If you're already in a trade and new information comes out which changes your opinion, you can always get out or add more

I have an extreme example of this, but I'm still in the position so I don't know how things will turn out

I've been hearing and reading of huge profit potential on crypto NFT's that also come with huge risk, so I bought some NFT's from 3 different projects

The 2 project NFT's quick lost value within a few days, while one of them more than doubled in the same time frame

Against your OP idea, I purchased more NFT's of the one that doubled. In about 5 days, it was up 10x, yesterday it was 20x from original entry, and today it's 35x

One NFT that cost $250 eight days ago is now selling for $9,300 (name of NFT is Bears Deluxe)

The other NFT's from the other 2 projects are down over 50%

Obviously since I'm still in the position on all of them, they could all go to $0 but maybe you get what I'm trying to say. English is not my native language and I have difficult time to convey my thoughts

It depends on the asset. If you're trading a volatile and risky asset, you should be getting paid the reward. Don't cut your winners in half
 
johnarb said:
You mentioned crypto... I do not think it's a good idea to do this with a high volatility asset, you'll end up cutting your winners too early

There's a video I posted a while back of Dan Tapiero discussing that most retail investors (traders) are unsuccessful in trying to time entries and exits for bitcoin and other crypto assets

I think it's better to have targets of what you're looking for in a trade/investment and stick with it. If you're already in a trade and new information comes out which changes your opinion, you can always get out or add more

I have an extreme example of this, but I'm still in the position so I don't know how things will turn out

I've been hearing and reading of huge profit potential on crypto NFT's that also come with huge risk, so I bought some NFT's from 3 different projects

The 2 project NFT's quick lost value within a few days, while one of them more than doubled in the same time frame

Against your OP idea, I purchased more NFT's of the one that doubled. In about 5 days, it was up 10x, yesterday it was 20x from original entry, and today it's 35x

One NFT that cost $250 eight days ago is now selling for $9,300 (name of NFT is Bears Deluxe)

The other NFT's from the other 2 projects are down over 50%

Obviously since I'm still in the position on all of them, they could all go to $0 but maybe you get what I'm trying to say. English is not my native language and I have difficult time to convey my thoughts

It depends on the asset. If you're trading a volatile and risky asset, you should be getting paid the reward. Don't cut your winners in half
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If only English speakers wrote and expressed themselves as well as you Trump wouldn't have been elected. Imagine how history would have changed...
To reassert my earlier point, you've gained or lost nothing until it's sold.
 
deaddog said:
Well that's one way to never have a loss. :)
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Or a gain :(

Looking at crazy AMZN, an investor buying 100 shares at start of 2021 wouldn't have lost or gained anything over 10 months if they sold today, and the taxman would agree with that.

Over the same time period, a trader would have lost and gained along the way, and the taxman would treat it very differently even if the trader netted nothing.

upload_2021-10-5_10-23-28.jpeg
 
VicBee said:
Looking at crazy AMZN, an investor buying 100 shares at start of 2021 wouldn't have lost or gained anything over 10 months if they sold today, and the taxman would agree with that.

Over the same time period, a trader would have lost and gained along the way, and the taxman would treat it very differently even if the trader netted nothing.
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It's not a problem if you use tax free accounts.

I learned a long time ago that not taking a trade because of tax consequence eventually cost me a lot more than the tax would have. I watched a tech darling go belly-up. Changed me from an investor to a speculator.

I don't have any idea where the market is going tomorrow or next year. We haven't had a depression in years but we haven't had a pandemic in years so who knows. Capital preservation is priority number one. Fear of losing is greater than fear of missing out.

I suppose I could get whipsawed into the poor house but I'm hoping my position sizing and money management strategies will keep me solvent.

Speculation strategy is fairly simple. Buy stocks that are going up and don't hold stocks that are trending down.
 
Margin call happens to a lot of these guys in the beginning a few times. Then they learn to de-leverage so they can either make puny returns or hold on to losers for years! And they don't have to let go of their mistaken idea!
 
VicBee said:
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Over the same time period, a trader would have lost and gained along the way, and the taxman would treat it very differently even if the trader netted nothing.
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Then that wouldn't be a trader. At least not a professional trader.
 
Magic said:
Margin call happens to a lot of these guys in the beginning a few times. Then they learn to de-leverage so they can either make puny returns or hold on to losers for years! And they don't have to let go of their mistaken idea!
More...
Just like investors are told to hang on to their winners, the same can be said of hanging on to losers if one doesn't need the money right away in the expectation the loser will eventually turn a profit. There are plenty of solid companies whose share price dive from time to time and, instead of panic selling it makes sense to hang on.
 
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