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September 22, 2005
Stock Trading: Why Averaging Down is a Losing
Many traders, especially those new to the markets, have a habit of "averaging in" to trades that aren't going their way. The following reasoning is used: If this trade was a good entry at my earlier price, then it must be an even better entry now! On top of that, the trader gets caught up in the idea of improving his "average entry price". Unfortunately most traders learn the hard way tha this logic simply does not hold
From Stock Trading: Why Averaging Down is a Losing
Posted by Matt at September 22, 2005 08:26 AM
