Yes but my point is that even though a stock drops from 100 to 95 (5%) and it takes 5.62% to return to 100 does not mean that the stock is at some mathematical disadvantaged to return to 100. The stock will go down $5 and $5 with the same sentiment.
You'll understand one day ... maybe. BTW you brought sentiment into it. Not me. I'll stick with simple math.
I don’t know about others. However, I can easily hold a stock dropping from 100 to 50 but rarely holding a winner from 50 to 100. So the math works for me in a bad way. Even though OP is correct that stock price can go up or down the same amount symmetrically it’s not so for most traders/trading accounts.
Sure... some stocks are more volatile, more actively traded, and the moves are bigger. TSLA makes your case perfectly. +/- 4% days are normal for it. And there's stocks that make big moves down after an earnings report, only to retrace back up in a few sessions. It all depends on which stock you are talking about and the reason behind the drop. If some stalwart blue-chip gets cut in half for a good reason and you own it.... you might as well look at that and say "I need a 100% gain from here and that is highly unlikely to happen", because it is highly unlikely to happen. Even a 30% drop. But sure, you take a stock like C3AI ($AI) --- with a low float, WSB's, high short interest, etc... yeah all bets off. $40 one week, $25 the next, $45 the next. But you won't see that with say... a Home Depot. If it gets cut in half, you're f'd.
WXY - you're not factoring in that after a 50% drop the trader can buy twice the number of shares with the same cost basis.
This guy misses the bigger picture. When your stock drops from $100 to $50, you have lost 50% of your monies. So, if you started with $10,000, you are now down to $5,000 and have to start at a lower capital base to try and get even and make up that $5,000, just to break even. A very huge hole to get out of! In one of the pillars of Ed Seykota's trading, he says to cut your losses and let your winners run. That is the only way you will make huge monies in the stockmarket.
All I'm saying is if after a 50% draw down, your only reasoning to sell your position is because you believe that the math is against the stock recovering then you would be wrong in your assessment. The math actually supports that the stock will recover and most likely continue to higher highs ...just look at any index.
What are you talking about? Sentiment is what affects price action . If the "simple math" actually affected price action then the market would be in a perpetual downtrend when in reality it's in a perpetual uptrend.