A traders perspective: Say, the guy bough

A traders perspective: Say, the guy bough 100k shares at 1.30 and watched his investment drop and then close at .72. He believes the stock's resistance is at .75 and is worried that if the stock breaks thru major support at .65 the stock will drop like a rock and may even end the day at .20. So..........he sells at .63 which nets him a big loss and 63K investment dollars and he prays the stock goes to say .25. If the stock reaches down to .25 he can use the .63 and purchase 250K shares.

Of course, the stock could bounce up right after he sold at .63 and if it was a quick move he might not get in and end the day out of the game and with a large realized loss.

Also, there is the issue of "wash sale" which means he does not get to write off the loss although his new basis would include the loss. This assumes he bought again after selling earlier in the day.