e all the way back
to $40.00.

However, if the stock did trade back up to $40.00, you would see
a profit of $5.00 per share on 1000 shares, for a $5,000 profit.

This strategy worked very well during the bull market and for
years, many investors made large sums of money buying the dips
and doubling down.

In the table below, let’s assume that we purchased the stock at
$40, as in our example above, and then purchased additional
shares at the new stock price.

WIn today’s markets, everyone from amateurs to professionals
alike experience losses sometimes. Since the bubble burst,
investors have come to understand that managing losses is just
as important as attaining profits.

We have all found ourselves in situations where we have
purchased stock that proceeded to trade down leaving us with a
loss or a losing position that we had to fix.

During the recent bull market, a common solution was to buy more
of the stock at its lower price and wait for it to go up. This
strategy of buying more is called “doubling down.” This is a
risky strategy and not what we recommend, but let’s review it
anyway.

Doubling down allows investors to lower their dollar cost per
share so that the stock only has to gain back a portion of the
loss to reach break even.

For example, let's say you purchased 500 shares of XYZ stock
(XYZ) for $40.00 per share. Your capital layout would be
$20,000. (Commission costs, which vary greatly, are not included
in our calculations of stock transactions but should be included
when you figure your bottom line.)

Now let’s suppose that the stock immediately dropped down to
$30.00 per share. You would have a $5,000 loss on your
investment. In order for you to recoup your $5,000 loss, the
stock would have to trade back to $40.00.

The doubling down strategy would have you buy another 500 shares
at $30.00 which would give you a total of 1000 shares. (500
shares purchased at $40.00 and another 500 shares at $30.00).
This would produce an average purchase price of $35.00 per share
on 1000 shares, and is known as “dollar cost averaging.”

With the stock at $30.00, you are now only $5.00 away from being
even instead of $10.00 away. This is because you now own 1000
shares at an average price of $35.00. With this position, the
stock would only have to trade back up to $35.00 for you to
break even instead of the stock having to trade all the way back
to $40.00.

However, if the stock did trade back up to $40.00, you would see
a profit of $5.00 per share on 1000 shares, for a $5,000 profit.

This strategy worked very well during the bull market and for
years, many investors made large sums of money buying the dips
and doubling down.

In the table below, let’s assume that we purchased the stock at
$40, as in our example above, and then purchased additional
shares at the new stock price.

Whrice and wait for it to go up. This
strategy of buying more is called “doubling down.” This is a
risky strategy and not what we recommend, but let’s review it
anyway.

Doubling down allows investors to lower their dollar cost per
share so that the stock only has to gain back a portion of the
loss to reach break even.

For example, let's say you purchased 500 shares of XYZ stock
(XYZ) for $40.00 per share. Your capital layout would be
$20,000. (Commission costs, which vary greatly, are not included
in our calculations of stock transactions but should be included
when you figure your bottom line.)

Now let’s suppose that the stock immediately dropped down to
$30.00 per share. You would have a $5,000 loss on your
investment. In order for you to recoup your $5,000 loss, the
stock would have to trade back to $40.00.

The doubling down strategy would have you buy another 500 shares
at $30.00 which would give you a total of 1000 shares. (500
shares purchased at $40.00 and another 500 shares at $30.00).
This would produce an average purchase price of $35.00 per share
on 1000 shares, and is known as “dollar cost averaging.”

With the stock at $30.00, you are now only $5.00 away from being
even instead of $10.00 away. This is because you now own 1000
shares at an average price of $35.00. With this position, the
stock would only have to trade back up to $35.00 for you to
break even instead of the stock having to trade all the way back
to $40.00.

However, if the stock did trade back up to $40.00, you would see
a profit of $5.00 per share on 1000 shares, for a $5,000 profit.

This strategy worked very well during the bull market and for
years, many investors made large sums of money buying the dips
and doubling down.

In the table below, let’s assume that we purchased the stock at
$40, as in our example above, and then purchased additional
shares at the new stock price.

Wary greatly, are not included
in our calculations of stock transactions but should be included
when you figure your bottom line.)

Now let’s suppose that the stock immediately dropped down to
$30.00 per share. You would have a $5,000 loss on your
investment. In order for you to recoup your $5,000 loss, the
stock would have to trade back to $40.00.

The doubling down strategy would have you buy another 500 shares
at $30.00 which would give you a total of 1000 shares. (500
shares purchased at $40.00 and another 500 shares at $30.00).
This would produce an average purchase price of $35.00 per share
on 1000 shares, and is known as “dollar cost averaging.”

With the stock at $30.00, you are now only $5.00 away from being
even instead of $10.00 away. This is because you now own 1000
shares at an average price of $35.00. With this position, the
stock would only have to trade back up to $35.00 for you to
break even instead of the stock having to trade all the way back
to $40.00.

However, if the stock did trade back up to $40.00, you would see
a profit of $5.00 per share on 1000 shares, for a $5,000 profit.

This strategy worked very well during the bull market and for
years, many investors made large sums of money buying the dips
and doubling down.

In the table below, let’s assume that we purchased the stock at
$40, as in our example above, and then purchased additional
shares at the new stock price.

Wr>shares purchased at $40.00 and another 500 shares at $30.00).
This would produce an average purchase price of $35.00 per share
on 1000 shares, and is known as “dollar cost averaging.”

With the stock at $30.00, you are now only $5.00 away from being
even instead of $10.00 away. This is because you now own 1000
shares at an average price of $35.00. With this position, the
stock would only have to trade back up to $35.00 for you to
break even instead of the stock having to trade all the way back
to $40.00.

However, if the stock did trade back up to $40.00, you would see
a profit of $5.00 per share on 1000 shares, for a $5,000 profit.

This strategy worked very well during the bull market and for
years, many investors made large sums of money buying the dips
and doubling down.

In the table below, let’s assume that we purchased the stock at
$40, as in our example above, and then purchased additional
shares at the new stock price.

We all the way back
to $40.00.

However, if the stock did trade back up to $40.00, you would see
a profit of $5.00 per share on 1000 shares, for a $5,000 profit.

This strategy worked very well during the bull market and for
years, many investors made large sums of money buying the dips
and doubling down.

In the table below, let’s assume that we purchased the stock at
$40, as in our example above, and then purchased additional
shares at the new stock price.

When the bubble burst, the greatest weakness of this strategy
was exposed. When you double down, you are doubling your
position to average down your dollar cost per share. However,
along with the doubling of your position comes the doubling of
your risk. The strategy works well when your stock rebounds, but
not so well if the stock price continues going lower.

Once the bubble burst, many investors not only felt the sting of
not being able to recoup their initial loss, but got hit with
additional losses after they "doubled down" and their stock
continued to trade down.

Let's look back at our example. Above, we purchased 500 shares
of XYZ for $40.00 and the stock traded down to $30.00 leaving us
with a $5,000 loss. We then purchased 500 more shares in a
double down strategy to lower our average cost. We now own 1000
shares at an average cost of $35.00.

Now let’s say that instead of the stock rebounding, the stock
continues to fall to $25.00. The original purchase of XYZ at
$40.00 has netted us a $15.00 per share loss for a total dollar
loss of $7,500. But we also have to account for the additional
500 shares we bought at $30.00. This amounts to a $5.00 per
share loss on 500 shares for an additional loss of $2,500. This
brings our total loss to $10,000!

As you can see, “doubling down” doubles your position both on
the way up and on the way down. It can help eradicate losses but
can just as quickly multiply them.

So what can an investor do?

Introducing the Amazing Stock Repair Strategy. This strategy
involves buying one at-the-money call option while
simultaneously selling two out-of-the-money call options on the
same stock, in the same month.