Should I buy more stock if it goes up?
Start things off right by buying a leader once it goes through the proper buy point of a good base in volume that's at least 40% above average. Only buy more shares if the stock moves 2% to 2.5% above your initial purchase price. If it does, use 30% of your allotted capital for your second buy.
When should you buy more of the same stock?
First, buy more if your time horizon is long – as in more than three to five years. “History tells us the market tends to rebound impressively three and five years after hitting a bottom,” he says. “We don't know where the bottom is, but we do know the market is well, well off its peak.”
What happens when you buy more stock at a higher price?
Opposite from averaging down, averaging up involves buying more shares as a stock rises. This increases the average price paid for a position, but if you are buying into an up-trend, it can amplify your returns.
Do I owe money if my stock goes down?
If you invest in stocks with a cash account, you will not owe money if a stock goes down in value. The value of your investment will decrease, but you will not owe money. If you buy stock using borrowed money, you will owe money no matter which way the stock price goes because you have to repay the loan.