Yeah, but if you've suffered 35,000 in realized losses why would you walk away from that? You're in the same boat as if you averaged down.. it just took a lot more work getting there. In both scenarios both traders are trapped essentially...well more like loaded up than trapped if you consider the outcome.
I don't have a problem walking away from losses. If another opportunity shows up I'll trade it. I have no control over the market. I can only control what I do. Small losses protect my capital. One way I manage to do that is to not hold any losers in my portfolio. I don't believe it's the same boat. As the price drops I take small losses and have capital to deploy. If the stock continues to drop I can get in with a full position at a lower price. If you average down you eventually end up without any capital to take advantage of lower prices or other opportunities.
I think we have just proven that if you are trading the same stock, it makes no sense to get stopped out at all. You don't even get the benefit of the losses because of the superficial loss rule, so if you do take your losses and re-invest somewhere else, I am pretty sure it would have be in a different sector. Even if not, the same logic applies. AND lets not forget that this is a worst case scenario where you bought at the absolute top before a huge drawdown.
It makes sense to me to protect my capital. Sooner or later you run the risk of having a position not work out. Next downturn you'll find me in cash. And althought it's a worst case scenario it's the one you put out there. I just used your numbers to show that using stop losses gave you better results than averaging down. Also in any of the cases if the stock takes off before the bottom, the trader has a full position where the guy averaging down only has a partial position. But that is what makes a market. You keep averaging down and I'll keep taking my stops.
Yes they usually cancel shareholder shares and reissue new shares to the lender of the restructuring financing who will payout other creditors. They call it DIP financing...I call it BS
Based on the Utube testimonials, it's either really bad or really good. And no one is concerned about their account balance at that point!
I drew the lines after the trade finished because many times I don't need to actually draw real lines before I place a trade since its like looking at the Matrix, you look long enough, you see the girl in red. I pressed the print screen button on my keyboard, then pasted the image in Corel to be able to create the file I uploaded.