My shares in Company X are down 5% today down 5% Friday, is this a dip and an opportunity to add, or should I dump it?
If you asked 5 people you would get 5 separate answers as all invest/trade differently, with different goals / time frames/risk tolerance etc..
I strongly suggest having a written trading plan going into every detail of entries, exits, risk, stops, targets etc etc..brainwash yourself how you trade/invest.
What gives you the commitment to keep holding some of your stocks that retrace and may give back all your gains? Is it technical analysis or sound fundies?
To start with I always advocate adding to the ones you have already bought that are doing well.
I don’t have “rules” as such. I have what I call my normal investment amount per share, but I tend to buy only a proportion of this to start with. The proportion can vary dependent on what I consider the risk/reward could be. Typically I will start with 25% of my intended amount. I will do nothing more until the price starts to move at which point I may sell, on a sort of wide stop loss basis if the trend is down or seriously breaches support or if bad news comes out.
Alternatively I may buy some more. Only investing 25% to start with means I can afford for it to go down a fair amount before it does any real harm. Once I have bought the second lot the price means I have a fair buffer before it is a real loss. (this incidentally is one reason I do not update my portfolio total real time as when I did so I was always looking what yesterday said and panicked if it was lower). I may then buy more later on the same basis.
Thereafter I monitor news and continually update my valuation target. The price is always correct, so what I am looking for is for the price to close in on the latest valuation target and when it gets close I reduce the time frame of variability or trend average I will allow before getting out. In doing this what I am trying to do is see whether money is still flowing into the share or has started to go out. That way I can continue to ride the momentum but believing it will change at some point I stop myself from falling in love with the share. I never get out at the top, but I usually only give back a small amount of the good trades.
I hope that makes sense, all I can say is, it works for me!