Atlantic Coal Plc

[Cowlinn]

I made a bit of a newbie error, rushing into things too quickly.

I'm not too worried, since I could afford to lose what I bought. I bought ATC on 01/09/2015 for £0.23 it's now at £0.12

This was clearly a bad trade and I have learnt a lot from it.

However, what would you do in my position now? Hang on to this donkey stock and have it in my portfolio, or cut my losses and sell about 50% down?

Any thoughts?

 

[tomorton]

Shareholding isn't something I do now but I can tell you the conventional wisdom which I was taught in formal training.

Set a stop at 10% below entry, allowing for commissions and Stamp Duty. Don't move the stop if price falls. This will get you out with a 10% loss, which you can make up with only an 11% gain, well within practical possibilities. If you let the loss go to 50% before crystallising it, you would now have to make a 100% gain on a new investment in order to make up your loss, and there is no known shareholding strategy which will relaibly do that.

Of course, money management plays a part too, the conventional advice says don't let your 10% loss per posiion amount to more than 2% of your total account.

I recognise that these rules make some shares, especially penny shares, unbuyable - the spread is so wide that this would eat into your 10% allowance and any tiny price fluctuation would likely hit your stop. So be it, stick to large caps until you have generated some winnings to play the penny shares with. As a guide, I was usually able to get FTSE350 shares for which the spread plus Stamp Duty plus commission came to less than 1% of the position size.

There are some excellent books on share dealing - Slater, Douglas, Elder etc.

 

[tomorton]

But don't give up.

 

[Cowlinn]

But don't give up.

That's great advice, thanks Tomorton. If you were me, would you sell these shares - given the current situation?

 

[tomorton]

That's great advice, thanks Tomorton. If you were me, would you sell these shares - given the current situation?

I don't mind you pressing the point but the decision is as much an emotional crossroads as a financial one.

In financial terms, you could sell now, take the 50% loss but then make that back over the next series of cautious trades to be no worse off. Or you could continue to hold as you might have information, fundamental or technical, which makes you believe price will probably recover soon. Or you could take the view you might as well hold as you can still stand the loss if price goes to 0.1p and takes a decade to recover: or never does.

But what's equally important is how the different courses will make you feel when you turn out the light tonight, or you shut the PC down for the weekend. Which decision will make you sleep more soundly? Which will help you get the best out of your weekend? Only you can know the answer to these.