Australian (ASX) Stock Market Forum

Stocks Drop More than 50% within 6 months

Jump to new
krisbarry

krisbarry

Joined
5 August 2004
Posts
1,996
Reactions
0
Here is a list of stocks on my watch list that have spiked,then dropped more than 50% within the last 6-9 months, some I hold, some I dont. Just goes to show how volatile some stocks can be. Anyone care to add to this list?

BPO
CMQ
CUL
EGO
EPT
FMG
GTM
JRV
JUM
LVL
OEX
PNO
RPT
RRS
SHN
VLL
 
Kris

I can run a search and place all those trading on the ASX that have dropped X% over X time.and Vice versa if your interested.

Why are you holding stocks that have dropped 50%
or have you taken a punt with a bottom pick?
 
I hold two stocks which I have lost more than 50%, not going to sell at that kinda loss. Just going to hold out and wait for some recovery, then sell. I am in no hurry to sell, don't need the cash urgently so better to wait for at least somekind of recovery than to sell at such a great loss. I did not use any stop losses, just took a punt. Not too worried, just invested more money in both at lower stock prices, that way when they both recover a bit, I wont need them to go back to the orginal stock price b4 I make my money back.

I don't know of any other way to make money back on stocks that drop, other than to invest more.

I know some would say, better to lose 10% and walk than to lose 50% and invest more and wait for a recovery. I guess I am still learning and have made some huge mistakes. But equally have made huge gains on some stocks too in a matter of days or weeks.

All things balance out in my books and still in the black for this financial year considering I have only been trading since July 2004, self taught. No brokers, no courses, no software, and no one to blame or praise but myself for my own investments.
 
krisbary,

Being able to live with yourself is far more important than how many mistakes you have made (IMHO).

I can add FWD to that list, I lost a packet.
 
WEZ :eek: - I hold a little and now it's in a halt just as they offer more shares, I'm thinking of dollar cost averaging to minimise my loss as i have the time to wait.
 
There is a common misconception that if stock XYZ was good value at say 70c, it must be even better value at 50c. As Chris Tate says, why don't you extrapolate that to 0c (eg ION,SGW,SSS...). Is that the ultimate value stock???
 
Dan_ said:
WEZ :eek: - I hold a little and now it's in a halt just as they offer more shares, I'm thinking of doller cost averaging to minimise my loss as i have the time to wait.
Click to expand...


Hmm Id think Maximise more appropriate.

I have a great block of land in a swamp if your interested.

Seriously why would you invest more in a losing investment.

Hmmm spose 1000s do it every week with their Super!!
 
But equally if you applied the stop loss rule to every stock you bought, and they fell, you would continue to lose 5 to 20% of your capital on each trade. Stop losses can be just as risky.
 
Appreciate the response tech/a, My logic (as flawed as it may appear) was to invest a minimal amount to make my average price per share lower that what the shares were halted at, therefore when they reopen I would sell at my reduced price to result in a loss of only brokerage, (or it if opens at the halt price make a clean exit with minimal profit)

As only a novice in the area of shares I thought this may be a logical approach. Any constructive feedback is welcome.
 
Dan.

Lets say (hypothetically) you bought at 50c

Trading stops at 40c and you plan to buy at 30c to average down to 40c at which youll sell.
Price must fall to 30c ---then rise to 40c to do the deal.
Often price gets to 30c and continues down giving you 2 losses.

Kris.
Firstly you wouldnt risk 15-20% a trade. or even 10% or 5% of your trading capital.

Youll often see me using a 10% of purchase price stop.
Thats less than 1% of my total trading capital.

How?
Say I buy 10000 shares at $1 and risk 10% stop at 90c.
Thats a $1000 loss.
If my trading account is $100,000 or more then the risk on this trade is 1% or less.
Peple should do their own figures.

Second point with your reasoning.
When trading in a discretionary manner (which the majority here seem to trade) You simply have no idea of your win loss ratio and youll have and no idea your risk to reward ratio.Without this you cant possibly work out wether your trading style will have a positive expectancy.

Tragically most people when they receive an answer like the above tend to have their eyes glaze over and rush over to the stereo to place a relaxation disk on.While constantly mumbling----All to hard---all to hard.
 
Very interesting post tech/a,

Firm stop losses are definitely something I need to be doing - It's great to see examples like that :)

One question though - do you use a set stop loss of 10% or is that due to the change in market conditions? I had wanted to use 8%, which would've save me with regard to big BHP gains.

T.
 
taurus said:
Very interesting post tech/a,

Firm stop losses are definitely something I need to be doing - It's great to see examples like that :)

One question though - do you use a set stop loss of 10% or is that due to the change in market conditions? I had wanted to use 8%, which would've save me with regard to big BHP gains.

T.
Click to expand...


Taurus.
Im sure your talking of a trailing Stop loss rather than an initial stop.
2 vastly different applications.

My selection of a fixed 10% of purchase price stop is purely that which I set during systems tests for the methods I trade.

Interestingly if I decreased the width of stop to 5% I had more trades and more stopped out but really no appreciable change in Nett profit.
If I used 20% I had less trades less stopped out and STILL about the same NETT.
So I chose mid point.

If your talking trailing stop then you can ofcourse alter it to whatever as your trade progresses.I dont use one as Im generaly a longer term trader and a trailing stop is to close.
If your shorter term them the use of a trailing stop may well be appropriate particularly if protecting profit.ATRs are often used but I personally would prefer an optimised Moving average on the instrument being traded.
 
tech/a said:
Dan.

Lets say (hypothetically) you bought at 50c

Trading stops at 40c and you plan to buy at 30c to average down to 40c at which youll sell.
Price must fall to 30c ---then rise to 40c to do the deal.
Often price gets to 30c and continues down giving you 2 losses.
Click to expand...

tech/a

Thanks for the response firstly I will admit that the above was purely a ‘speculative’ buy and nothing more. However can you please clarify the following for me? Using your example, I mentioned I would average down to below the closing price (lets assume 35 cents) when trading resumes I would have a sell at 35 cents. So if I am sold out I out at this price I only loose brokerage. If it drops lower then I’ll get out where I can. Yet you say it has to drop and then climb before I can do the deal?

It this because I have to sell the shares at the two buy prices to break even, as opposed to averaging it out?

But again this was a once off speculative trade where as now I am almost out of the market now due to present conditions and educating myself. I’m starting to get involved in T/A and until my trading plan is complete and I have a better understanding of T/A I will not be parting with cash. I’ve read a lot of your T/A threads and appreciate the information you provide.

Sorry to deviate from the topic and thanks for the assistance :)
 
Dan.

As I understand it(and I could be wrong--please correct me if this is so.)

You bought at say 50c
Your at a loss.
say 40c
Lets say you bought 10000
and now closed you see that they are loading at 45c
so you load to buy ANOTHER 10000 at 45c
If filled youll then have 20000 at an average of 47.5c
IF trading then goes to 47.5c then you get out at even
If it falls to < 45c then your worse off.

Hope this explains how Im seeing it.
 
Dan_ said:
WEZ :eek: - I hold a little and now it's in a halt just as they offer more shares, I'm thinking of dollar cost averaging to minimise my loss as i have the time to wait.
Click to expand...
I thought I was dollar cost averaging with HLD, when in fact I was just buying on a downtrend. I guess that qualifies me to comment :)

Here's my current understanding. Dollar cost averaging means regularly allocating the same amount of money to purchase blocks of shares in a particular company. The point is to ignore the share price for your purchases; just allocate the funds regularly and buy however many shares your dollar amount happens to be worth when purchase time rolls around.

It's not a trader's strategy, and it's not appropriate for specs. It's a way to build your stake in a business that you believe has solid prospects for a long-term, profitable future and which you intend to hold indefinitely. Blue chips, for instance. Or, in my case which might not be the same as anyone else, TIM.

Have I got this straight yet?

Cheers,

Ghoti
 
Top