When to cut loss a stock? Is average down a good choice?
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1. Basically to cut loss a stock is a must because protect your own capital is much more important than earning from a stock. Many one doesn't know why. They only focus on chasing a stock. Greeds kill everyone. People doesn't know why a stock will move up and why a stock move down. Sometime it doesn't apply any logic on the movement of the stocks.
2. Set your cutloss around 10% to 15%. Basically there is no correct answers for this statement. Ask your own heart whether how much you can afford to loss. Basically never a stock can drop until nonstop it will rebound too. If it's too far from your entry. You should take opportunity to cut when it's rebound.
3. Never carry a hope for stocks that down more than 50%. Basically what you can do is cut loss or average down. For average down you might need carry higher risk. Besides, it requires more capital for retailers. Usually retailers might not have much capital as a result, average down might not be a good choice for most of retailers. However if your stock drop more than 50%, there is no point to cut anymore. Too late to cut. So what you can do is wait for the rebound and cut.
4. Basically never cut loss during panic selling. It's the worse choice ever to do that. Unless you manage to cutloss earlier before that happen. Up and down for stock market is normal. So if you really feel that stock is undervalued. You can cutloss first and buy back at even lower pricing.
5. Basically you should take action and experience it. It's not easy when you involve with real money and emotion. You might not able to think clearly whether what to do. Fear will affect your decision and mindset. Unless you able to achieve till a state that you invest or trade without emotion involved.
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