Guys, I promised I'll come up with a formula for the bear market which is like short selling only the difference you get loan from your own shares instead of borrowing from your broker. The formula is more of short selling than averaging down...coz with averaging down you will need to add up more money from your pocket which you might never have. But with my formula its different you wont have to add more money to reduce or clear your losses or even you stand a high chance to make a profit with a little patience. Maybe most of you are already doing this but there are people who dont know what to do when things get bad. Im going to do it practically to prove it how it works. I believe be it bull or bear...there is always money to be made in the stock market. Criticism are welcome but please dont be harsh coz you all know me...you might put me off. It works very well with the idea I had posted a forum earlier, but for now I will not include that here but I will use example that will work for everybody...no secrets this time. You can use this formula with your existing shares and see how it will work...anyway of improvement, questions, is welcome or if you fell it doesnt sound realistic and you have evidence to prove it...is welcome. After all we are all here for the same purpose,to make money. share whatever you have...For those of you who are already doing this...I would love to know the name of this formula...This one is mostly for those who are scared of the bear...

I will use mumias as an example, although you can use any counter...

Lets say you had 91000 and you purchased mumias when it was Ksh. 13

I will use 2.1 broker fee coz most people still use 2.1 with their broker...I will also minus for both buy and sell orders so that to get accurate money figures.

91000*2.1/100=1911
91000-1911=89089
89089/13=6853 shares
I will omit the odd 3 to cover up for stamp and if there is any fee

Lets assume you will sell at a loss of Ksh. 8

13-8=Ksh 5 loss per share

6850*8=54800*2.1/100=1150.9

54800-1150.8=53649

Calculating the loss you got from selling at a loss

89089-53649=35440

Your total loss is 35440

What will you do to recover the 35440?

53649*2.1/100=1126
53649-1126=52522

Lets say you will keep the money and you will come to buy the shares during election time and maybe they will be trading at Ksh 4

52522/4=13130 shares

I will not include the 30 shares for any occurance

13100 shares lets say you will get rid of them at Ksh.8 when things are good after election

13100*8=104800*2.1/100=2200

104800-2200=102599

Now lets go back to the drawing board to see what you will make or how much you will recover from your 35440 loss

102599-91000=11599

Note this: You have recover the 35440 and you have made extra 11599 totalling to 102599 instead of 91000 you had started with

End of my formula.

If I did averaging down, it will mean

6850*4=27400*2.1/100=575.4+27400=27975.4

I will have to look for extra Ksh.27975 for me to be able to sell @ Ksh. 8 and above to recover the loss ie 27975/4=6990shares

To put it simple 13+4/2=8.50

But with all these problems...why the hell will you add up money to buy shares...just use the existing ones...you wont feel miserable....
Please I would like to hear your comments especially from @thedeal

This a formula, its up to you on how you want to play it. The most important, you have an option on reducing the loss or getting rid of it or even making the profit without adding more money. Besides, you'll be watching to know when is the right time to sell or buy...my formula is full of possibilities...The idea is to recover...

This formula is perfect. I did it with NIC bank last week by seling at 42.
The tricky bit is knowing when the share will slide further, i am in thaty dilema of thinking i should buy (everyday)

Yes...and you wont have to spend extra money to cut your losses.

lovely, I think what you are doing/saying simply amounts to:

"Sell now then buy more shares for the same cash as there is a possibility of the stock price going down in the near future"

Ama?

I bet one should play it safe in case of price rebound. Like re-buying half the NIC at current 36.00 and if it falls to 32 buy more. The reason being the price may bottom and start heading north too fast by the time you realise it is at 40 which equals the selling price less commission.

Buying in bits after selling works better but you also watch on demand and supply to decide if you should buy in bits or buy with the whole amount...

I will use the same mumias example, you have an option of buying in bits...you could buy some @ 4, some @ 3, some @ 2 some @ 1 If you split it this way...you will make more profit or reduce more losses than the one I quoted after buying @ 4...remember, using the same amount. I will do the maths for splitting and post it here...

@lovely2010. Thanks for the insight and using a practical example for the illistration.

I will also do posting on this, but I will assume you bought @ 60 sold @ 42. I will show you how you could have made money today and also how you could escape settlement period...ie buy and sell same day...I will use today trading prices...