• Bildar
    There has been a lot of discussion lately about "averaging down". Here are some pastes of my posts on this subject from a another thread:
    11/15/12
    Reply (18)
    • Bildar: Opinions are all over the place regarding averaging down. Here's a good, balanced article from Investopedia: http://bit.ly/PBCW7L
      11/15/12
    • Bildar: It's bad idea for day traders.
      11/15/12
    • Bildar: Most newbie traders using margin accounts blow out because of averaging down.
      11/15/12
    • Bildar: There's a psychological allure to averaging down, which can dangerous as it obscures objectivity.
      11/15/12
    • Bildar: That psychological process often kicks in If one is overly compelled to 'be right' about stock picks. Many people handle being wrong poorly.
      11/15/12
    • Bildar: If you are swing trading, averaging down can work quite well when the market is trending higher, as it has most of this year.
      11/15/12
    • Bildar: What often happens, because of the consistent reward of averaging down during these times, is loss of objectivity when the market turns.
      11/15/12
    • Bildar: I do use a process I call controlled accumulation. It's systematic and unemotional, and works well in part because Hal does well with this.
      11/15/12
    • Bildar: This process does employ stops, and also options to control risk.
      11/15/12
    • weed: Thanks for your observations.
      11/15/12
    • Dr. Kris: Thanks for this link. I think the psychological allure of trading down on "sexy" stocks is the most dangerous...
      11/15/12
    • Dr. Kris: ...That's when one is blinded by infatuation and is the most vulnerable.
      11/15/12
    • Bildar: Dr. Kris: Very true.
      11/15/12
    • X Oil-Field: TY@B insightful thread,agree it can be painful & folks should use care when averaging down,sometimes it can be very profitable or end badly.
      11/15/12
    • Boatyzaffa: I believe averaging down on an index, but NOT an individual stock, is an allowable strategy for long-term holders. Avg down on individual...
      11/19/12
    • Boatyzaffa: ... stocks is a sucker's game (imo). No matter how "big and safe" the stock appears. Look what happened to $C, $DNDN, $MCPIQ, $NFLX,$BAC...
      11/19/12
    • Boatyzaffa: ...Size does not matter (as far as stocks go), they can always go lower. Great post Bildar and great comments by you all too!
      11/19/12
    • Dr. Kris: Bildar: Buying on the dips in a confirmed uptrend isn't consider averaging down. Two different concepts.
      11/19/12