Averaging Down vs Cutting Your Losses?
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- Опубликовано: 2 июн 2024
- Averaging down in the stock market is always a hotly discussed topic.
In fact there is no right or wrong answer, it entirely depends on your individual situation, belief, time horizon, research work and asset involved.
Most people following this channel however understand the importance of risk management and the dangers of putting too much equity in to one stock.
Hopefully the video will at least provide some more perspective to the topic.
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Hi Gareth. Hope you are fine. Could you please do a review on Robert Lichello's book "How to make $ 1,000,000 in stock market automatically". This book propagates No technical, No fundamental and works purely on mathematical calculation. At the outset I think this will work really well on any index fund and that too with high volatility is best
Thanks Gareth. Crystal clear as always. Basically, average down on indices & big tracker funds, but not on individual shares. One way of doing this is to buy a very small holding at first and, if it goes down, buy more when momentum indicators suggest a reversal of trend.
Opinions on the market diverge; some claim overvaluation due to rapid gains, while others cite strong economic fundamentals justifying high valuations. Raises concern for my $600K
equities going 8% up and 20% down. Should i hold on or sell off my positions and hold cash?.
Don't sell; avoid trying to time the market and incurring unnecessary taxes. Stay grounded and focus on the long term. Or just seek counsel from a market strategist.
I agree. On my personal experience working with an investment advlsor, I currently have $656k in a well-diversified portfollo that has experienced exponential growth.
That's truly remarkable. I hope you don't mind pointing me towards their direction.
She's known as 'Olivia Maria Lucas'. One of the finest portfolio managers in the field. She's widely recognized; you should take a look at her work.
This recommendation is timely! I conducted an online search with her name and set up an appointment with her on her website. Thanks
4:00 NASDAQ 100
6:45 Chasing high flying (cheap) stocks
7:10 ZM, DOCU
8:10 ARKK, NVDA
Not yet seen this video but I know already I will like it as all the others you did. It feels like an early Xmas gift. Thank you! Seasons greetings
...
Now after watching the presentation I'm again (... and again) positively surprised by the content and the way it's presented. To my knowledge the best financial channel here on YT but happy to get hints for others to watch!
Another beautifully clear explanation of a tricky topic. Thank you!
5:40 Jeremy, is that you? LOL (financial education channel)
I always cut losses personally. I’ve tried averaging down, sometimes it works out. I’ve also cut trades at break even to watch it scream higher.
The challenge lies in finding the right balance between confidence in the investment and risk management.
It's a constant dilemma, my friend
How do you approach this decision?
Personally, I lean towards cutting losses to preserve capital and minimize risk. However, I've seen cases from a portfolio analyst where averaging down paid off handsomely.
What do you do to assess the specific circumstances that guide your decision in choosing between these strategies?
Tbh finding portfolio analytics like LUCY ROSE CARTER who can assist you shape your portfolio would be a very smart option/choice. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Another terrific video by a rules-based trading master. As always, explaining complex subject matter in simple terms shows your deep understanding of the material Keep them coming. Consider reviewing one of Greg Morris's book on Trend Trading as it is a classic.
Average down on a longterm good stocks and sell call options 6 months out. Just keep rolling the call option.
Thanks for this video Gareth!
A video on leverage ETFs, decay, both good and bad points and using your indicators over both dca and long would be good.
tqqq
It all depends. I average down all the time, successfully. It depends on the nature of the trade or investment, the condition of the underlying stock or instrument, the time outlook, and a number of other factors. But yes, in a stock like the ill-fated Peloton at $164 a share, attempting to average down a stock that really should be shorted would be a monumental disaster. Essentially there is no bottom.
I never average down. Almost by definintion the stock is going against the trend. Would you really buy a stock in that situation? If I decide to keep some stock I instead sell enough to cover my initial capital outlay and just hold the rest. Since I recouped my outlay the value of the remaining stock is profit; albeit a declining amount until the stock bottoms out and starts to climb again.
If the stock I'm in dips back to 50% retracement, as a lot of stocks often do before moving up, I'll sometimes pick up another unit or two if it's still within the parameters of my system. But ultimately it's about being honest with yourself. If a big red candle with no wick closes below the previous low, it's over. Pull the plug and go look for the next setup.
I just throw darts 🎯
Works pretty well for gambling. But like you said, for my IRA accounts I manage risk by cost averaging index funds while adjusting ratios based on macro trends: Currently $10 each (weekly) TLT, BND, BX (basically a private equity fund), OMFL, VOO, VYM, VONG, QQQ, VTI, VXUS.
A simpler version is 60/20/10/10 VTI, VXUS, BND, (annual wild card) choose one such as QQQ, SPY, VYM, TAN, BITB, TLT, etc.
(Been trading for 4 years) I'm up 95% this year, and I honestly owe it all in thanks to your channel! In addition, you've brought to my knowledge several amazing trading books that have helped me so much! Thx bro 💪
Wow! Congratulation - I wish I did as well as you. Which stocks?
Im up 0.8834838%
So funny that You did put the face of jeremy lefebvre, so spot on!!
Buying the dip strategy did work for a decade of easy money. But not sure if it can still works going into the future with interest rate normalizing and money supply tightening.
Excellent presentation. Thanks.
I enjoyed this. Though I have been watching less yt and doing more research. My retirement contributions are not making my 401k any better, should I buy popular index funds in a brokerage account, is this a better alternative to outperform and rebuild my retirement?
My suggestion to any investor is to always learn to do your own research and don’t just go buying stocks without proper considerations. Most of what is pumped out by the media is what most RUclips financial entertainers churn out to you as fear uncertainty and doubt.
Agreed. That and reading some basic principles laid out in books like The Intelligent Investor by Benjamin Graham. There are also good RUclipsrs out there like Felix, Graham Stephan, Humphrey Yang and a few others, but generally you are right.
Its unclear which stocks and sectors will lead the market in the next uptrend. Stay away from the stock market if you do not have guidance from a plannner and investment strategist. My finances have been in order since I got a wealth planner like Monica with a 600 B AUM working for me.
Who is this Monica you speak about? I have also been searching for an advisor who can direct us on where the economy is headed new year. I don’t live in a big city.
Monica Mary Strigle just do your own research you’d find details. Kid you not I made a 218% gain since began rebalancing as many times as she suggested in 18 months. The bear market isn’t so bad if you know where to look.
Great video. You nailed it with Jeremy and Cathy. I watch Jeremy from time to time just purely for entertainment.
Great video- as always!
Glad you enjoyed it!
Simply brilliant. I've been trading for 24 years. Self taught. Financial Wisdom is 100% spot on. This particular video is actually all you need to know. Weekly Nasdaq for overall market direction (O.M.D) with a 20 Wilders Moving Average. Hedge your positions with lower time frames. WHO ELSE KNEW ? Thanks.
Fantastic!
Which video of yours are you referring to at the 2:40 mark? I couldn't find it in your playlist.
The conclusions of this video meet my own conclusions. Nicely done
the bespoke scanner on your website - does it screen for Australian stocks on ASX?
It does 👍
Ride the up. Sell if riding long time up after any 10% drop. Or if tries to back track where you bought it on perfect base in up moving trend ( buying 5 % or less of perfect buy point). Need more - lot more to know
such a valuable video thanks really👍
Glad it was helpful!
It’s all about correct valuation
Averaging down only works if you did not buy a speculative growth or penny stock
Is it recommended to average down smart beta index based etfs ?
Thankyou Gareth
Thanks Amit
Excellent job
thanks!
I think averaging down can work as long as you have a position size limit and keep to it. Just buy in tranches as the knife falls, but don’t go over limit of your predetermined limit size.
Are you a profitable trader?
@@mijnnaam5478 Meaning?
@@freddales8697 are you a trader and do you consistently make money with it?
great content! anyway I can test the breakout scanner before subbing?
We don't offer trials sorry.
Interesting presentation
Glad you think so!
Good video, I think Carthy is ablaze somewhere though.
Can we please have the link to your video “explode your wealth with limited risk” that you mention.
Can’t find it anywhere…
It's in the library
What if Cathie Wood key metric of success is AUM?
Moral of the history: if you want to pick stocks by yourself don't be lazy and study them in depth
Sir im a great fan of your content. please post frequently if not regularly. ❤
Working on it!
It's depends what you average down on ...
Oh arrk will do great. People have to short time horizon.
NEVER add to a losing trade.. I was given this advice a few years ago and it has always served me well
Don't buy over hyped and overpriced stocks... Start there first.
To me nvid was an overpriced stock that is due to ai hype obviously
Depends on your timeframe really, and whether you bought purely on technicals or fundamentals. If I followed the approach of quickly cutting losses and not adding to losers, I'd have lost money on positions that ended up as multi-baggers.
Yep, I got trapped by a sudden drop on MLGO (which rose to over ten dollars a share). The price collapsed quickly. In the past week MLGO dropped to about 50 cents a share. I diluted the average cost of MLGO to a point where it frequently hits about every month (The do a lot of pumping press releases). I will slide back out from under this stock on the next pump.
I hope previous patterns hold up. Some stocks go down and never rise again. CGC is a good example of this.
Happens so often...
Like button before watching :)
If you average down the one hundred stocks, do the four stocks go on To Out proform the index.
Completely agree with you
Where were you in 2021?! I DCA down’d too much already. Castor maritime and AT&T especially. 😢
You will not be alone
super helpful
Glad to hear!
How is the competition going? I think I saw you were up 23% YTD, is that correct?
Not far off, I'll post at the end of the month..
This guy should get a Medal 🥇 just for naming Names.....Crazy 🤣 Cathy😂😂😂😂😂😂😂😂.
as i transition from trading intraday options to swing trade i think i have watched all your videos in these last 2 weeks and it helped me a lot
You losing less ?
@@ChupraCumbra yes,and i made profit,swing is better for me
it takes time for beginners to understand they should buy more only when price go higher not lower. averaging down is a shortcut to blowup capital. tnx for video.❤
Thanks for sharing
Sir i like your video.
Please can you make a video on how to pass profirm account ???
Averaging down is kinda like gambling paradox. This time it has to reverse. I lost a lot of money today trading like this. Won few positions at first but then few big red candles wiped all the gains.
Seems like the time to buy is now.
I have the MOST fan when you talk about Cathie Wood 😁
High prices for everything have severely affected my plan. I'm concerned if people who went through the 2008 financial crisis had an easier time than I am having now. The stock market is worrying me as my income has decreased, and I fear I won't have enough savings for retirement since I can't contribute as much as before.
It's recommended to save at least 20% of your income in a 401k. You can use online calculators to estimate how much you should save based on your age and income. Saving at least 20% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. By saving this much, you can take advantage of investing in the stock market and potentially grow your retirement savings over time.
Considering the increased complexity since the 2008 crash and COVID, I suggest diversifying your financial portfolio. I hired an advisor and successfully grew my portfolio by over $150K during this turbulent market using defensive strategies that protect and profit from market fluctuations.
That's fascinating. How can I contact your Asset-coach as my portfolio is dwindling?
It's all about timing and time.
Uptrends have retracements.
Downtrends have retacements.
If you understand the long term direction.
The short term can actually tell you where the market is going.
Especially for the next little while.
Assuming you know what you are looking for.
I lost a lot of $ understanding this stuff.
I rarely lose trades now.
Some i am only in for 15 minutes. Others i hold for weeks.
I have a few rules i live by.
Trade assets with clear daily directions only.
Pay attention to news.
Wait for the banks to make a move. That is especially lucrative with crypto. The bank always sells and so i refuse to ever enter a buy trade on BTC. I wait for the bank to start the feast and then ride the meteorite for a few days. It's the easiest $ in trading.
how do you know when banks trade crypto ?
I wouldnt worry so much about youtubers having so many subscribers, that number should be thought of as a life time cumulative total, the channel you mention only gets about 20 - 40k views per video and I would wager many of those are not actual investors watching for research.
So....short everything and buy puts. Got it!
2024 will you be pivoting into other assets such as currencies?
Doubtful
so I compounded loss today doing exactly this
Oh, just the video I need. As I look at LIFW and see that I am $74 down. 😂
I think it is called a catching a falling knife
Absolutely
Every big time investor/trader has one saying in common, let your winner's run and cut losses quick. Averaging down is how you lose capital - better to cut and if you think you want to get back in then do so later with the capital you have saved. If you are averaging down on a etf - the math is out there that doing so in lump sums returns better alpha over dollar cost averaging.
🔥🔥🔥
A stock's going down for a reason and if it's crashing it'll be for several reasons.
Yep, often well before common folk find out...
The Cathy hype drove me mad. She spoke with 100% conviction and watching people gobble it up drove me mad. I'm glad she's been proven a hack, but feel bad for the people she's financially damaged.
Yep, there will be another Cathy at some point again 😒
Interesting, i always thought averaging down is the way of the unbeatable, cuz u simply keep lowering your avg price, of course that could work if the stock does not turn into a dead stock plus u have an infinite cash reserve lol
Gareth, dId you quit the US Investing Champion? Or did you ask them not to publish your results after January (that’s the first and last time your results appeared on their website)? Thanks
Still in, I'll post for the year end of December 😉
@@FinancialWisdomNice! So, you were doing it in stealth mode I see! 😂 Can’t wait!
Sounds like "averaging down" is a combination of "buying the dip" and the "sunk cost fallacy". Not a smart move from a risk perspective.
Cathie did her best 😂 to take down her business.
The bots in the comments advertising “Finacial Advisors” are getting better
I know.. sorry 😞
@@FinancialWisdom not your fault YT needs to do better at stopping them
"above the head mustard sh*t!" Start at a low execution and only add to winning trades. Average out. I don't care what you have been told. "go all in" ..."let it take your stop" ? Are you kidding me? Take a small profit early and set stops to break even. You can't lose on this trade!
I assume you are new to trading....
Did you run out of books to review?
Kind of 🙂
At present, the most prudent consideration for everyone should be diversifying their income sources, ones not reliant on government support, particularly given the ongoing global economic challenges. This remains an opportune moment to explore investments in assets like digital currencies such as Bitcoin, Ethereum, and XRP. thanks to Jane Rosiri for her guidance in these fields, her proficiency is outstanding
Investments have proven to be one of the most advantageous choices one can make for themselves. To this day, my crypto profits consistently contribute significantly to my overall wealth, alleviating any need for me to rely solely on my salary
In my opinion, the pandemic has underscored the significance of diversifying income sources. Merely having a job doesn't guarantee security; the true assurance lies in cultivating various investments.
The strength of Jane Rosiri's approach lies in her dual focus: not only does she actively pursue profit opportunities, but she also tenaciously safeguards investors from potential pitfalls. Achieving such a delicate balance is a rare accomplishment.
Nice to see this here, after a series of trading setbacks, I was on the brink of giving up until I encountered Jane's program. With her guidance, I've not only recouped past losses but am now charting a trajectory of consistent growth.
This question and all the replies are part of a scam.
averaging down works on trillion dollar index
"95% of money managers won't beat the S&P" - WB
😊😊😊😊😊😊😊😊😊
Spend the $9 to sell the stock and put the money somewhere else.
Hey, have you guys been keeping an eye on the stock market lately? It's been pretty volatile,I lost almost $5m in my stock portfolio. but you know what they say - no fear, right?
Absolutely! It's all part of the game. I've learned not to let short-term fluctuations get to me. In the grand scheme of things, the market tends to bounce back.
True, but it's hard to ignore all the noise and speculation. There's always some news or another causing ups and downs. How do you guys manage to keep that "no fear" attitude?
That's a good point. I was thinking about reaching out to a financial advisor to get their take on the current market situation. With all the optimism, it might be a good time to reassess my investment strategy.
I totally agree. A financial advisor can provide valuable insights and help ensure that our investment portfolios are aligned with our long-term financial goals. They have the expertise to navigate through market fluctuations and make informed decisions.
What did you invest in? Who is the advisor that guides you? more info on this if you don't mind
Summary:
- Average down only on indices
- Cut-loss for individual stocks
Thank you.
Thanks😊
Can't average down if the market never drops.
It always does to some degree
On average, the S&P 500 falls back to its 200-week moving average every 3-4 years, and even more frequently in recent years - in 2018, 2020 and 2022. This has worked very well since 1983. Before that, the price hovered around this long average line. Be patient - the special offers will come.
I am losing lot of profits due to this One bad Habit.
NEVER NEVER NEVER avg down, i have 4 years exp and it never is good
It’s all I do actually (trading 3x long index ETFs no less) and I even buy more the more the index drops. I simply wait until the index recovers, which it always does, and lock in gains then. A total no brainer.
Times are weird. The US dollar is losing purchasing power due to inflation while strengthening against other currencies and assets. The stock market, real estate, crypto AND precious metals are down because people are fleeing to the "safety" of the dollar. where else can we put our investment money? I can't afford to see my savings of around $320,000 turn to dust in front of my eyes.
I would say have a mentor. Not sure where you will get an experience one, but if your knowledge of the market is limited, it seems like a good bet.
I've been in touch with a professional ever since I started my business. Knowing today's culture The challenge is knowing when to purchase or sell when investing in trending stocks, which is pretty simple. On my portfolio, which has grown over $900k in a little over a year, The professional that guides me chooses entry and exit orders.
Very true, you can be passively involved in the markts and still amass wealth-gains using an investment advisor. I first dabbled in stocks late 2019, just before the pandemic, and that same year gained over 150% with no prior investing experience, basically all I was doing was following directions of my advisor. We are working on a retirement ballpark of $3m and I’m certain my goal isn’t farfetched after subsequent investments and tremendous returns so far.
That's fascinating. How can I contact your Asset-coach as my portfolio is dwindling?
Do you mind connecting me to your advisor please. I desperately need one to diversified my portfolio.
I almost block this channel when I saw the picture of the fake guru.
Yeah no, reduce when it goes against you , if it turns and starts coming back then add back in ... reduce keep eye on higher time frame scenario know volatility dies down around lunch time, dump it for a good as it gets before lunch