Averaging Down

All day traders have losing trades, because no trading system is correct 100% of the time. As long as these losing trades are managed correctly, they are a normal part of day trading and nothing to be concerned about. However, when traders start using techniques such as averaging down to manage their losing trades, the previously normal losing trades can quickly become a big problem.

A full description of averaging down, with an explanation of why it is mistakenly used, and why it should be avoided, is available in the averaging down glossary entry.