hi, Lets say you bought a stock at $100, Prices drops to $50 over sometimes. Basically we assume you need a 100% gain from $50 level to reach breakeven, which isn't true, if i 'm not wrong. If stocks rise 1% everyday , How many days it takes price to reach $100? If stocks rise 3% everyday , How many days it takes price to reach $100? Thanks
You are talking two different things. What percent a move is needed to get back whole. It is 100% of $50 added to $50 to = $100. What percent a day is needed to get back whole. (Let someone else handle that, no free time atm to punch it out on excel)
That's right. Forgot that formula. Since I've used twice in my life. Here is a online calc - initial value $50, 1%, 70 days (as 2rosy shows):- = $100.34 https://www.inchcalculator.com/daily-compound-interest-calculator/
The gain to get from $50 to $100 is 100%. So unless I have misunderstood something I'd say you are indeed wrong.
Suppose the stock is at $100 and then drops to $100x. Here x is a decimal less than 1 such as x = 0.4 to represent the stock drops to $40 ($100 * 0.4 = $40). Then the question is how many periods, n, of a gain of y will get you back to $100. The answer is to solve this: x * y ^ n = 1, where y is in the form 1.04 to represent a 4% increase for each period. Example 1: Let's say $100 goes to $60 (x=0.60) and then afterwards every period is an increase of 1% (y=1.01): x * y ^ n = 1 0.60 * (1.01)^n = 1 (1.01)^n = 1/0.6 = 1.67 n * log(1.01) = log(1.67) n = log(1.67) / log(1.01) n = 51 periods (approx) Aside: Note that you need exactly 1% for each of the ~51 periods. If you have 26 periods of 0.5% and 25 periods of 1.5% you will do worse. The more variation there is, the worse off you are. eg: 1.05 * 1.05 = 1.1025 (10.25%) whereas 1.04 * 1.06 = 1.1024 (10.24%) and 1.01 * 1.09 = 1.1009 (10.09%). Example 2: Let's say $1000 goes to $750 so x = 0.75. (The formula works independent of the starting value.) This time you want to know what percent is required to get back to $1000 in 24 periods: x * y ^ n = 1 0.75 * y ^ 24 = 1 y ^ 24 = 1/0.75 = 1.33 y = 1.33 ^ (1/24) y = 1.01206 -> 1.206% (approx)
%% AT 1% rise , or even 3%/ everyday, a lot longer almost always to rise to 100\ than drop. And that's why bears can make [or lose[ money faster. Much, much longer for a stock to get back to $100 when SPY benchmark drops 1.7% a day or 5% bear drop in a week .But like another trader said;; even an ammo co can do very well in a bear market[bear trend].
You should learn the rule of the 72's, which states that a quick way to estimate how long it will take your initial money to double is to take 72 and divide by the percentage growth rate. In your case 72 / 1 = 72. So it would take approximately 72 days at 1% to double. A 3% growth rate would require approximately 72 /3 = 24 days.