Stock Markets Exposed - stock trading?

stock trading?

If a person buys a certain stock at a high rate and it goes down, therefore losing money. What will happen in the middle of it going down they buy more of that stock, this time at a lot cheaper price than the primary one? If it keeps going down do the shares bout early go down much more (since they were bought when it was high) compared to the ones from soon? If it goes up, but hasn't reached the initial cost (for buying the very first hold), do the ones bought later go up in value, while the ones bought primarily still stay in the negative since it hasn't passed the loss threshold in respect to them?

Public Comments

It doesn't matter how much the stock was worth at the time of purchase. All of the stock would be worth the current price.
Lets say you buy 10 shares of stock at $30. It falls to $25 and you buy 10 more shares. You have now spent $550 on stock. The market price of that stock is now $20. Your 20 shares are worth $400, so you have lost $150. There is no difference between the stock bought at $30 and the stock bought at $25. They are both identical shares of stock.
It's called dollar-cost averaging. By buying it and then buying again lower, your average price per share will be lower. Market value will always be the same.
Here's the simple rule traders have; Have an exit strategy before you buy the stock and stick to it. So..... if the chart indicates a place to get out... then you get out. OR....... if you chose that a 5% loss is the most you can take...... put a "stop" on the stock at that point. The reasoning you're using will, ultimatly..... be very costly for you. Read some good books on investing. Read some good books on the psychology of investing.
This called averaging down. It is pretty dangerous. Basically you buy another load of shares at the lower price therefore making your average price lower than your initial price, but still higher than the market price. You have got to be sure your reasons for buying in the first place are still valid. If you get it wrong and they go down further you lose heaps more money.
When you buy stock you buy at a set price. If the price goes down and you buy more, your average price per share goes down. If you buy 100 shares at 30 and the price goes down You buy 100 shares at 25 and the price goes down You buy 100 share at 20 . You now have 300 share of stock with an average price of 25 300+250+200= 750 750 divided by 3 = 25 Hope that helps. But seriously if you didn't know the answer to your own question you need to learn a lot more on how the market works before you start investing.
If you buy at a certain price, and buy again at a lower price you're averaging your cost (One at a higher rate, the other at the lower) Regardless how many time you buy or at what price, you can just keep computing an average cost. People buy Mutual Funds under a DCA, a dollar cost averaging progam. This is where they buy periodically the same fund product, and they just keeping averaging their cost. HOWEVER, in the real world Traders never never average down. When they have a loss, they take and move on. The worse thing a trader can do is keep buying a stock when it is dropping. - never trade against the trend.
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