Averaging Down or Averaging Up | Trading Lingo
Averaging Down or Averaging Up | Trading Lingo
05-18-2025, 05:38 PM
This is essentially the same process as scaling, except that averaging down isn’t something many trader do. It’s generally not considered a smart trading style. Averaging down is when you buy a stock at 10, the price drops to 8.00, so you add more shares and bring your average cost down to 9.00. If you add 2x or even 3x the size to 8.00, you could bring your cost average down as low as 8.50. The risk is that you are adding to a position that you are already losing money on, and some traders say this is throwing good money at bad money.
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