I made a mistake a month ago and bought shares during a strong downtrend. I am not at a loss as to what should I do? Should I sell and come out or wait for reversal which I am waiting but not happeningI bought this symbol at 156 and its current price is hovering around 110. How can i predict it will ever come back?
Perhaps I will come out and accept the loss and use the raminig money to trade others else even if it comes back to 156, its goona take a time. the fact is that it came down from 156 sharply and it is known to be very volatile.I have marked with circle where I bought it.
One piece of info., The day I bought this share, I missed one findamental news (which was announced the prev day) that the Chairman of this company dies and till date, there is no announcment.
It is an an insurance company whose parent is ACE Group.
I’m not a big trader, so let me preface my advice with that. You are correct, there are two options, sell and take the loss or hold it. I can’t give any advice on this company but I have had similar circumstances. If you think the company is good and it will come back, then hold. If you don’t feel so good about it, then sell. I over traded in equities and drew my account down by 60%. Then I put my remaining money in Apple at on of their low price times and it brought my account back. Some stocks will go lower what you have nothing left. I watched a friend of mine do this with a much larger account than I have and he lost about everything. He just kept saying he thought it would turn around. Pick what you think is best and make your decision and then don’t give it a second thought. You raise some good points about opportunity costs. What is this current position costing you in terms of missed opportunities? Just be careful and don’t overtrade.
I’m sure you’ve learnt your lesson and won’t be buying a stock again when it is clearly going down. Nevertheless, when you opened the trade you should have immediately set a stop loss. I always recommend to stock-buying friends that they should set a stop 20% below the entry. And that the 20% should represent an amount that is a tiny fraction – perhaps 1% – of their investment capital, which they are happy to kiss goodbye. Suppose you have $100,000 investment capital and you decide to risk 1% per position. That’s a risk amount of $1,000, which enables you to invest $5,000 into each of 20 stocks and buy 32 shares of ACE:AB at $156 per share. Your stop loss should have been immediately set at a share price of $125.
According to your chart the price is still heading south and there is nothing to stop it going to zero so, if I were you, I’d get out immediately. If and only if the price starts making higher lows and higher highs would I consider buying. Meanwhile, I’d start looking for better opportunities where I am buying into stocks that are already making higher lows and higher highs.
Totally agree with the above comments. Personally I would cut the loss, at least on the information at hand. The scenario is very volatile, and there is no indication of recovery yet. This is where emotions and pride come in to play. You really want the price to recover, and can’t stand the thought of such a loss, but each day the price goes down and becomes a bigger loss. Good luck whatever you decide
Oraclefusions,
which broker/charting platform are you using?
yeah, it’s best to stay out of it immediately. I hope you already did.
You should’ve also considered the stock’s volatility (which you were aware of) early on.
I notice that ACE:AB has continued its slide south closing today at 67.25, so I hope you took your own advice to come out and accept your loss way back in December.
