No. of Recommendations: 1
Quill,

Averaging down is a no-no. It's risky strategy better avoided. But, of course, we've all done it and gotten away with it, and --as a value investor-- it has to be done. But not as a trader. If the market doesn't immediately confirm the entry are correct, you get out.

However, here's a situation our rule set hasn't yet addressed. When the market does confirm the entry was correct, do we add to the position? Adding money would increase profits, but at cost of increasing trade-management complexity. I'm inclined not to average up and just make single shot bets and then move on. But I'm wondering whether I should try to average up when conditions favor doing so.

Your thoughts?
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.