the myth of averaging down for traders

[tomkat22]

Explain please.

Trader 1 knows well before he takes the trade EXACTLY how many shares he wants to acquire then scales in until he reaches that total.

Trader 2 usually doesn't know or care how many shares he will end up with,he's just winging it,adding more shares as the price continues to drop. Terrible strategy.

 

[deaddog]

Trader 1 knows well before he takes the trade EXACTLY how many shares he wants to acquire then scales in until he reaches that total.

Trader 2 usually doesn't know or care how many shares he will end up with,he's just winging it,adding more shares as the price continues to drop. Terrible strategy.

Not much difference in my book. Could be that trader 2 has done his analysis and feels that he is in the trade for the long term. It's called dollar cost averaging.
I don't know how many shares I want to aquire when I enter a trade. What I know is how much of my capital I want to risk. If the trade moves in my direction I'll add to the trade while reducing my risk.

 

[tomkat22]

Not much difference in my book. Could be that trader 2 has done his analysis and feels that he is in the trade for the long term. It's called dollar cost averaging.

I suppose that's fine if you're a buy and hold investor who can afford to be a bag holder for months or years and hope nothing happens to "force" you to liquidate that position.Apparently that's Cathie Wood's strategy also,bless her heart. Problem is often times when/if that investor finally cries Uncle and throws in the towel on that trade he's lost an insane amount of money.

 

[virtusa]

I suppose that's fine if you're a buy and hold investor who can afford to be a bag holder for months or years and hope nothing happens to "force" you to liquidate that position.

That's not an investor to me. That's an idiot.
Starting your investment by losing a lot of money. LOL.

 

[virtusa]

It's called dollar cost averaging.

"Dollar cost averaging" is a way to impress people after your timing was horribly wrong.
In general used by people with a huge ego.

 

[deaddog]

"Dollar cost averaging" is a way to impress people after your timing was horribly wrong.
In general used by people with a huge ego.

It's for people who don't like to sell because they might follow the wrong decision with a wrong decision.

 

[newwurldmn]

That's not an investor to me. That's an idiot.
Starting your investment by losing a lot of money. LOL.

you are 100percent accurate in picking bottoms?

 

[deaddog]

you are 100percent accurate in picking bottoms?

 

[newwurldmn]

View attachment 306705

if you can’t perfectly time your entry then you are an idiot.
-virtusa

 

[semperfrosty]

"Dollar cost averaging" is a way to impress people after your timing was horribly wrong.
In general used by people with a huge ego.

Youre slowly losing the plot virt.