Don’t Average Down

Have a provision in your money management plan that says, “Don’t average down.” Averaging down means adding to a losing position, and you shouldn’t do it. This is one of the cardinal sins of trading. If you are losing, there is a good reason for it: The trade is no good. If it were any good, you’d be making money on it, not losing. There is no surer way of getting hurt badly than to start adding to a bad position.

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