Buy Stocks as they Move Up - not Down!

Don't average trading losses, meaning don't put "good" money after "bad". Adding to a losing position will lead to ruin.
Is it always works this way?

 

Paul Tudor Jones has a sign on a wall in his office... "Losers add to losers".

Rather than "average down", you'd be better off nearly all of the time to "stop out and re-enter at a lower price", if so inclined.

 

i think that sign is circa 1985 but whatever. LOL

 

That's good! Was a proper practice then... and still now. A "universal law" of trading.

(In my early days, I once answered a margin call on a Live Cattle position. Believe I got lucky*, as it worked out OK... I eventually got away with a small profit. But as I thought about it later, gave me the willies... Haven't "averaged down" nor added capital on a margin call since.)

* I say "lucky", as that was my first foray into the futures market. I didn't really know "come here" from "sick 'em".

 

I had hair back then

 

Truth is, that averaging down can work within an overall plan. Entering trades in stages is a time proven way to win on the upside or downside.

If I ever get the chance to talk with PTJ again-- I will ask him if that sign was photoshopped---

His local office is opening soon--

http://pbhfa.org/tudor-renovates-palm-beach-office/

surf

 

me too! lots of it.

surf

 

Do you see "averaging down" the same as trying to "accumulate at a perceived value/low price"??

 

You guys must be doing it wrong.

I still got ALL of my hair!! (Then again, I don't "average down". LOL!)

 

say if you are going to buy 1000 shares and you enter 200 at 5.00, 200 at 4.50, 200 at $4.00 etc until you bought all 1000---- that is averaging down, correct?? That's what I mean-- not just aimlessly adding to losing positions