RE: FOMO kicking in?13 Jul 2024 17:39
@Patshare, I remember contacting my broker, first time I realised my average was out, then brought it up on a BB, then the experienced guys explained you need to keep a spread sheet..
End of the day your profit/loss is misleading, if your frequently trading..
I think the issue is each time you sell it is priced against your average, and the matching quantity of shares deducted from the valuation. Profit is visible in your cash balance, but losses are not kept in sight.
The average remains the same when selling.. only adjusting when buying, increasing any difference
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So if we initially bought 20 shares at £1, the book cost is £20,, ave £1..........
if after, the share fell to 50p, and we bought another 20 at 50p,....
now we have a BC of £30, 40 shares, ave 75p
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lets say the price dropped to 40p, and bounced back to 50p, and we thought lets get some money back as its going to fall again,.................
so we sell at even, those 20 new shares at 50p(£10), and we are back to the originally 20 shares which cost £20.. well the account will show only £15.
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So £10 back, leaving original investment costing £20
We sold those 20, Ave=75p,
So sale = 20x 75p, valued at £15, thats a £5 loss,( but we go our £10 back)
Now BC for remaining shares = £15, (20 x 75p, )
When our stocks valuation reaches even we are actually down £5, it not until its showing ~33% profit your even...
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I wonder how many have happily sold out at small profit, not realising they lost ?
A way of the markets keeping poor investors interested, hiding their losses..
I am confused now lol