Think of the simplest reasons.

When you buy a stock and the stock price goes down, what essentially has happened?

Answer: You either buy the wrong stock or you buy at the wrong price.
Either answer, your buying action was wrong and this is why the stock price moved down.

Of course, one will say, I bought the correct stock.
That stock is fundamentally strong.
It fell cos..... err .... no luck.

Maybe.

But no matter what, you were wrong.
Averaging down means you are buying more of your original mistake.
Would you agree?

Averaging up.
You buy the stock, it goes up.
Why?
Right stock or the stock was bought at the right price.

Or just plain lucky?

But no matter what, you did something right.
Averaging up means you are buying more of your original correct decision.

But MANY would argue that they tend to lose money when they average up.
Why?
How come doing more (buying more) of a correct decision end up failing?
Is this tactic wrong?

How about asking if one was averaging up correctly?
Simply adding up to a winning position and simply adding at any price is reckless and usually would fail.

Me?
I am a fan of averaging up.

Averaging up for me is difficult... only done it few times, end up not so good results. Got trapped a few times as well.

In fact my average down produce better results.. maybe because i tend to buy fundamentally sound but slow stocks.

So master.. what are your averaging up criteria?

When I bought the stock, if the price going down, it doesn't matter if I saw the value at least will be times 5 of the current price after a decade.
For some, it could be interpret it is a wrong move, but for some it is opportunity. Different people see different thing, so I am not trying to argue which way is better.
Timing no doubt is quite important, can improve one's performance, but the confidence, and the faith will to hold through bad situation is something I believed will deliver the return in the long run ( From investor perspective).
I were wrong in short term, but I know I will be rich in long term. But one can say, what happen you also wrong in the long run...for example holding MAS share 10 years ago? This totally depends on the investor business foresight and the only one he can blame is himself.

I know you're a trader, maybe a very outstanding trader. Averaging up is a really good tool for trend trading purpose.
Myself is an average investor and probably very bad trader, I know I am a bad trend reader / Technical Reader, that's why I only stick to my game.
For you, averaging up is feel more safer because that's your game plan, while mine different, I am comfortable with averaging down here.

Nothing wrong or right here,

This post has been edited by foofoosasa: Jun 12 2013, 08:00 PM

Conclusion: whatever investing technique you employ, janji hijau-hijau untung kuat kuat

Don't la masta here and there.
Me just having some time to share some opinions only.
There are tons of reading materials on the net but I think one of the criteria is when you add up, you add up in small quantities, so that after adding up, your average cost doesn't jump up.
Ya, you can't double up when you average up.

wow master so late also still here....

sometimes.... i feel that buy in red, sell in green looks better.....

Like I said to gark, I am just sharing some opinions, that's all and what I am not here to argue what is right or wrong.

Anyway, do you know that even a famous investor like Warren Buffet had averaged up on one of his best investments, Coke?

And also for your info, I am not a market timer either.

I wouldn't know really since as you say I trade Ah Pek stocks.

Macha so happy.

No matter white or black cat, as long as it can catch the mouse is a good cat

Hm, I bought some Matrix share at 2.67 on opening day, scare it will go up

Dividend ex date in 2 weeks and the price is now 2.57, I would say can buy lar. Divi is 13.5 cents

yeah!
but i got not much money, only can choose one now~~

mah sing is annoucing Bonus share this end of june

Haha... thanks master. Will try out average up technique later.

Ya last time i average up by doubling tne bet... kena trapped.

I totally agree Boon on the theory of averaging up, because it reflects the right thing to do at that moment, while if the stock is going down, the tend to have some "bad" news that we are not aware of ........................... yet.

I totally agree Boon on the theory of averaging up, because it reflects the right thing to do at that moment, while if the stock is going down, the tend to have some "bad" news that we are not aware of ........................... yet.

If your stocks is apek... then mine must be great grandfather liao...

How to earn money if not focus on timing / trend by averaging up? assume solely from trader perspective.

Bonus issue means earnings dilution.
How about the MahSing-WB after BI?

The exercise price will be adjusted lower based on the bonus issue.

ic, but there is still interesting IF 5:1





+

FYI Mahsing has broken support and can go lower. Not good time to buy or average or you could be buying into a falling market. It would
be safer to wait for prices to stop falling and see how strong is the rebound first.

Using charts have helped me to find good entry prices to buy good fundamental stocks at reasonable prices and not at peak prices
and give me more chances to make good profits.

If you simply and blindly buy without knowing the trend, you can lose a lot of money or get your money stuck in non -moving shares.

Matrix is also not a good buy now.

Just my observations. Not buy/sell recommendations.