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Fellowship of the Shares

For the next 2 hours while we break for trading, pray hard that DOW futures and HSI and Nikkei turn around from their REDS. If not, be prepare for deeper losses in the afternoon. I am not too optimistic that it will turn around like the past trading sessions. Not always so lucky to bail out losers. Good Luck...I am staying sideline still.... Cheers!

 

 

I think the worst thing a trader can have is keeping a losing counter in his portfolio. It is like carrying a heavy mental burden with him and it will greatly affect his trading adversely. Not only it will affect his focus but it may even give him the cold known as "trading paralysis" where he will lose confidence and afraid to enter new trades. He just "frozen" when time comes to pull the buy trigger all because of this losing position hanging in his mind. I have been through this, and this paralysis stays until he cuts away this loser and start with a clean board...

Never ever keep a loser. Just dump it and forget it.... :))

 

Hahaha...

I do have something in common with DaJieJie (thought I didn't)...

Like her, I don't do any averaging at all...

When I am wrong immediately after an entry, I immediately dump.

But if I am right, I just ride the profits to a significant point...

 

 

Regarding averaging - I agree with all opinions. Personally I don't do averaging. But if you want to do it, you should base it on strong FA principles.

 

Elfie - take it easy gal! Life is short. Enjoy it.

 

If trading or investing is so straightforward as Livermore puts it, then there'll be more people who will become rich with the stock market...

If one only buys real 'low' (this a relative term at best) and keep it for years, one is reasonably sure to gain something out of it.

But the question is how much is one going to buy?
Does one put all one's savings into it... some do.
Or just a small portion of one's available funds? This is more likely the case.

Thus, to get rich inthe stock market is not too practical a proposition.


One must also bear in mind that as prices become lower,
any further drop is much higher in percentage terms than when the price is higher (thus a larger risk)... 

 

Suharto

Inna lillahi wa inna ilahi raji'un.

Salute !

( verily we belong to 'Creator' and to 'Creator' we return )

 

 

All stocks that come down go down in some proportion though it may not be proportional. Let's say stock A is 30c and stock B is $1.20. Ok, so the market crash happen. But can stock A be worth 0c? Of course not. So similarly there has to be some bottom for stock B.

 

Averaging down with wide price difference would just mean that say you bought at $1.30 don't buy at $1.25 if it comes down again. Maybe look at $1.20. This way you still have "bullets" left. Don't average down until you have no more "bullets"   

 

elfinchilde :

the lived have lessons for the living ... that's wisdom ..

read Sumiko Tan yesterday ?

;  )

 

 

pikachu Veteran	Posted: 27-Jan-2008 22:25
x 0 x 0 * Alert Admin	Hi Livermore, What do you mean "wide price difference" ?

Hahaha....

Continued discussion along these lines is going to open up a Pandora's Box of contention...

 

My 'hantam':

STI gaps down to 3117/3139.... slow mini-rebound to 3150... HSI will open gap down but the effect on STI may be muted... STI will peak around 11am -11.45am... then... the real drop begins.

I agree with Idesa168 -60 pts is about it... so we should see a close around 3100. If panic comes in, maybe 3071 low can be hit. If really teruk Europe kicks in, 3050, or 3035 (This is a -4% move for STI; I think this is quite unlikely though, U.S dropped 1.4%, NOT 3%; moreover it was a Friday so still gotta factor in some profit taking/weekend risk minimisation by U.S mkt traders.) might be the day low.

Just purely SPECULATION. Watch the market and see where it goes.

 

Let's guess:

Morning most counters will open lower with a gap down. Then buyers come in to snap up the shares to close the gap. Thereafter, most counters will drop to where it opens. HSI opens lower at 10am, STI will follow suit. Afternoon Dow Futures turns bad and all counters will scramble to sell causing further dip. I am anticipating STI to close +- RED 60 points on Monday.

 

Hmm this is what I think might happen on monday

Might open higher as some bb's might have bought on Friday on hopes that US will be green , but towards the afternoon will push the prices down

 

i.e Fri Closing 0.50 - Monday open 0.52 , trap those pp who think we've discounted the drop liao, late morning wack it to 0.48 till closing

Meaning bb would have made at 0.52 and double short it to 0.48

or hehe it could just gap down in the morning and rise up if futures looks ok. Anyways the mkt is always unpredictable , if we all knew what would happen we would be rich

 

ah. missed it. yes idesa, i know you were joking/trying to cheer me up. thanks for it. :)

 

yea, gotta be careful with averaging down--which was why i said it only works on some counters. like what shplayer pointed out: only on the fundamentally sound ones, so you must know FA to choose to average down.

wide px dif: ie, don't buy just cos it's a 2c or 5c drop. you'd likely just be sinking in further and further. you need to have set target levels that are spaced apart, such that in the end, your ave px is dropped by quite a bit, rather than a few cents only.

eg, yzj: if you'd bought at 2.5, you wouldn't choose to ave down at 2.4, or even 2.2 (esp when charts read down). you'd maybe have bought the 1.2 low. which'd then bring your cost px down to abt 1.85. more manageable for the counter to hit that px than a 2.30+ target, if you look at it mathematically.

k, little elf off to sleep. nites all.

 

Hi Livermore,

What do you mean "wide price difference" ?  

 

Personally I don't like to average down. But now averaging up is getting a bit tricky. One of my friend is bravely averaging down on a fundamentally good stock. I think he will reap profits well. Yes, it has to be fundamentally good stock. If you really wish to averge down on a stock, do it with wide price difference

 

I find averaging down is perfectly fine if done correctly on a fundamentally sound counter, blue chips. And one has to have a longer term view when doing so. If done so periodically, religiously and emotion not be affected by mkt sentiment on a blue chip counter, I am sure he can sleep well in the night and reap profit in the long term (5 years and above).

 

Yes, averaging down as a 'tool' by itself is dangerous.

But it has its merits if one is fully on top of the fundamentals and value of the company.