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Example; If I buy $500 worth of Bitcoin and the stocks drop from say 4,000 to 3,200 - is my entire investment lost completely and I have to start again ?
Or is it now just negative (not worth anything) and if the stocks rise back up do I regain what I had without having to do anything ?
Next day it is at 3,600 so now I still have $100 ?
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If you buy $500 worth of bitcoin when the price is $4000, then you would own 0.125 bitcoin. If the price drops to $3200, then you still own 0.125 bitcoin, which you could sell for $400. You do not "lose" your $500 investment, it just becomes worth less (in some sense you "lost" $100, but your loss is only realized if you sell your bitcoin at the $3200 price). If you do nothing and the price goes up again, you could then sell it for more.
You own the amount of Bitcoin - just the value in e.g. USD changes. – KOld – 2017-08-22T00:41:54.077