Because securities tend to move more over a longer timeframe so if you happen to be wrong and accumulated more positions in the wrong direction over a longer term, then your losses will be bigger with bigger moves that a security can make over a longer term.
Averaging down plays well with people's recency bias. They never seem to remember the 1 or 2 times they get fucked...
oh i see thanks, make sense, because doubling down is really risky if direction is wrong(and/or) there is not strong support from investors as for traced lines in the graph
at the time of the merger the companies failed because of mismanagement. Not because of averaging down. Now BAC buying countrywide and then merril lynch….
Let’s make this simple…for those without ability or experience…”averaging down” = financial death…for those with some strategy and ability, it’s part of the game… defining terminology is critical to discussion…ask spooz top about averaging down…for some its scaling in, which would infuriate the masses on here who believe thats against all of the rules
What is there not to get? A short term trader who is bullish or bearish on a trade cannot assume a perfect entry, so they enter a long or short inside of a range with a fail safe stop loss outside of the noise range…but if you become too literal with your definition of averaging losers, you will fail to understand that buying or selling on a scale inside of a range can increase your edge…
So you're saying. I think it will stop and reverse here, no make that here on second thought here this is really the reversal point. See I know it all along.
I never add to losing trades, that's dumb af.. "Feed your winners, starve your losers." For swing trades, i scale in when positions close strong, at 2day highs. I scale out at 2day lows
You need to decide if you want to be a trader or an investor? Traders ALWAYS use stops,investors not so much. It's a "duh" statement but when a trader averages down he increases his position size and thus increases his exposure, therefore any further movement against him in price amplifies his loss that much quicker. When I enter a trade and the price moves hard and quickly against me my reaction is to just FREEZE,,dont increase my exposure. Take time to evaluate the situation then make a decision.That wasn't the case when I first started trading. I get a kick out of amateur investors who just keep adding to a losing position,they dont call it averaging down,they call it "dollar cost averaging".Buncha Cathie Wood wannabees I guess.LOL