It is very ugly out there, and many stocks have no bids and are falling into the abyss. Some of these will be great buys, but most small traders are not very good at averaging into positions that are in a downtrend.
There are two main reasons for this. The first is insufficient capital, and the second is impatience. Small traders will almost always average into weak stocks too fast and too big. When this happens, it sets the stage for emotional selling when the stock does not bounce as hoped.
The thing that wipes out more traders than anything else is averaging into a downtrending stock too aggressively and then having some significant bad news hit. That is what causes the biggest losses.
I see many stocks being beater up right now that I'm convinced will be much higher at some point months from now. A good example is the cannabis sector. It is easy to think that they can't drop much more since most of them had some great earnings reports, but there is just no way to know when the trend will shift or how much lower they will sink.
The key to averaging into a stock in a downtrend is to start very small and to increase the incremental buying only after a stock starts to act better. If you wait for a small bounce before you start adding more, you will have a very clear stop-loss point if you want to reduce the positions.
Keep in mind that when you are building a position in a poorly acting stock, you can take a stop and then rebuy. It is extremely important that you not allow the position to grow too big, too soon. Reduce it and then rebuy it when things shift.
Also, it is important to recognize that the goal is not to buy the bottom tick. The goal is to try to catch an uptrend trend. When you focus too hard on catching the exact low, it is easy to lose sight of the fact that the stock may continue to languish even if it is no longer going down.
Slowing buying into a poor market as we have currently can be a great strategy, but it is paramount that you move very slowly and keep plenty of buying power in reserve. It can take a long time for a trend to shift.
I'm implementing this strategy right now with a recent favorite Urban-gro (UGRO) , which had a great earnings report but now has given back all its gains and is at the 50-day simple moving average.