Brentp
Well-known member
If you have something worth $100 and it decreases in value by $50, you have lost 50% of your investment, realized or unrealized. It would then take a return of 100% to get back to the original value. If you sell and then immediately buy back in an equal $ amount, the loss is still realized as it has been in effect marked to market at that point but you have not lost in quantity of head or shares or whatever. You may not think you've lost but the bank sure does and they'll stop playing the game once you've used up too much of your equity and start getting close to losing the bank's equity. The most dangerous thing is to make panic based decisions that cause you to have more trading losses than gains.
With that being said, the most financially safe strategy is still buying and selling constantly as it averages out gains and losses. More people have gone broke timing the market than riding it out and investing steadily.
With that being said, the most financially safe strategy is still buying and selling constantly as it averages out gains and losses. More people have gone broke timing the market than riding it out and investing steadily.