What to do when stock price goes down ? Buy more, Sell, Hold ?

How do I know what to do when stock price goes down ?
Should I buy more stock, sell it or hold it ?

Frequently asked question. The right answer may worth billions or even trillions sometimes.

First, you need to know why is stock price going down.

• Is market crashing or is industry crashing or is the specific business crashing ?
• Is stock price of competitors going down as well ?
• Is company in declining industry ?

If there is a high probability, that stock price will rise in the future, then hold the stock or buy more (if the price is too low).

If there is a high probability, that stock price will not rise in the future, then you should consider to sell the stock, to protect your money and minimize losses.

What you should definitely do when market drops is:

• Avoid panic - Emotional behavior may cause you to do bad decisions.
• Do not ignore risk limits

"Buying the dip" is a good investment strategy. But before buying a low priced stock, you have to be sure enough, that there is a high probability of price rebound.

For example:

When the price of Nvidia stock dropped, there was a high probability of price rebound, because Nvidia is a leader in its industry.

On the other hand, when the price of PayPal stock dropped, there was not so high probability of price rebound, because PayPal has many competitors.

Please mind there is always some risk when investing to any stock or other asset.