Distinction must be made between 1) legging into a position & 2) buying more simply because you are "down" & figure by buying more you can turn green & exit faster. Former being useful typically for "longer" term stuff & later being the precursor to pending, eventual, & un-avoidable doom. I read about that PTJ office opening up, interesting.
I think it makes sense to do this after a loss only if you then have reason to believe the stock is ready to reverse and this makes the stock a bigger potential earner than before it dropped. To do this just to bring your average to a point where you can tell yourself you aren't as much in the hole is silly. What you originally paid for the stock doesn't matter, the only thing that matters is what it is worth now. You invest $1000 in xyz and it devalues to $800. You now have xyz stock worth $800. At this point pretend you had no money in the stock. At this new lower stock value do you still think it is a good idea to have $1000 invested in it? Then by all means, buy another $200. But if you wouldn't buy now, you shouldn't hold now, your $200 is gone. There are thousands of ways you could make that $200 back, it doesn't have to be in the stock that took it from you.
I didn't start making money until I stopped averaging down. You're much better off using stops and then re-entering, rather than holding and averaging down until you're finally profitable.
Exactly My "word" of Mouth! Same Experienced, works like a charm. Averaging Down might work for someone with couple $Million traders
The problem with scaling in on it a major losing stock or stock that's really heading lower is that you can get stuck into a position and then that stock never breaks out and you're holding on to those losses for many years so remember what some of the greats along with Jesse Livermore said is that “ I must buy on a rising scale. I don't buy long stocks on a scale down i buy on a scale up.