QUOTE(Boon3 @ Jun 12 2013, 06:58 PM)
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.
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