In stock trading, Crypto trading, even buying inventory for your business, it is very important to average your cost per unit. This is very simple but I'm always surprised how many don't know about it.
I keep it simple to the point and don't consider trading fees etc.
I buy 100 shares for $10 each
My cost: $1000 , hoping it goes up, so I can sell for profit.
What if it doesn't?
Let's say the price per share drops to $7 .... PANIC? SELLLLL? Take your losses?
I buy another 100
Cost for this deal: $700
Now I hold 200 shares for the cost of $1700
I just reduced the price per share to $8.50
One more time the price drops, $5
I buy another 100
Cost for this deal: $500
Now I hold 300 shares for the cost of $2200
I just reduced the price per share to $7.30
Finally the share starts rising and goes to $9
Now I take profits
I hold 300 shares, sell for $9.00, a total of $2700
My profit is $500
when the price is 10% less then when I initially started investing in that share.
If I would have just held my original investment, I still would be 10% down.
In order to be profitable in trading, you not only need MONEY but also TIME.
You only can lose if a share drops and never comes back, or if you panic and sell to early.
AND THAT'S HOW I MAKE MYSELF FEEL LIKE A GENIUS
Hope you enjoyed this small example, thank you for reading
All the best
Gunter Nezhoda