Yin-Yang wrote:Thanks Small. One last question.
Do you ever sell at a loss also?
I mean, when the price was going down you buy few chunks, but the price is still keep on going down; would you exit at a loss at some point?
Yes.. I sell at a loss..
Practically, as a trader, nobody can be 100% accurate on buy/sell decisions. That's why there's a "stop loss" strategy. So as a trader, u shud plan your trade and trade your plan.
You can quantify the profit you want from a particular trade.. Buy the no of shares that produces that amount and sell accordingly at your profit margin (10%, 15%, 20%.....)
Say u want 10K profit from a 10 rupee share with 10% increase in share price, then u shud buy 10K shares and sell above 11.
Lets face the truth... Avg up/down strategy only gives u peace of mind. You've already made a mistake but u dont look like a fool if you buy low again.. ur stress released, dats all. If you buy REEF at 11.90 thinking it shud be a good price, seeing it's trading at 11.50 would not make u an idiot. But trading it at 10.50 would most certainly tell you that you've made a mistake..
So there are 3 choices;
1. You can buy at 10.50 - in this instant your stop loss (usually 10%) has already triggered but it's your gut feeling tells you it's not right that REEF goes below 10.50. So u take a chance. But if this goes to 10-10.20 then u gain would look like an idiot.
2. You can wait till it comes up, avg down a little bit (say ard 11) and unload with 10%-20% profit. You will have to wait for this though.
3. You can sell - as your stop loss is triggered, you sell without prejudice.. then call it a failure and look for another trade.
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