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In traditional stock market jargon, you may hear the term ‘averaging down’ … and that it can be a viable strategy over time. What does Tim Bohen think? Tune in to learn more about this old-school approach and Bohen’s take on it.
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The idea of averaging down is buying a stock at a discount … It can be a way to lower your cost basis.
For example, say you buy a stock at $10, and it drops to $8. If you buy a hundred shares at $10 and another hundred at $8, your average cost basis is now $9. So if the stock trends back up, you’re in the green when it hits $9.01.
If you didn’t average down, you’d need that stock to get back to $10.01 to be in the green. Sounds great, right? Don’t get excited just yet.
If you’re new to day trading or trading in general, you might be trading with a small account. That’s great! But you’re probably not trading blue-chips like Amazon or Apple. Averaging down on these stocks is a totally different game.
You’re probably looking for volatile stocks, momentum stocks, stocks that trade for $10 or less. If you try to average down on a big runner, you can set yourself up for disaster. These stocks tend to spike, fail, and never come back.
Unfortunately, most traders can’t admit when they’re wrong. They refuse to take a loss. That can mean they become a bagholder. Frankly, that's the wrong mentality … and why so many traders fail.
You gotta have the right mindset. Add to winners, not losers. Adding to your cost basis may seem counterintuitive, but you’re adding to a winner. That’s what consistent traders do over time.
Adding to a loser — especially in low-priced stocks — isn’t viable over time. Maybe you’ll get lucky. But guess what? Luck never lasts. That’s not a viable means to becoming a consistent trader.
Add to the winners. Cut your losers. Let those winners run!
#StocksToTrade #TradingTips #AveragingDown
*Tim Bohen teaches skills others have used to make money. Most who receive free or paid content will make little or no money because they will not apply the skills being taught. Any results displayed may be exceptional. We do not guarantee any outcome regarding your earnings or income as the factors that impact such results are numerous and uncontrollable.
You can lose money trading stocks. Do not invest money you cannot afford to lose. You understand and agree you will consider the important risk factors in deciding to purchase any of our products or services.
🔴 Try StocksToTrade for $7: http://bit.ly/2GPqVdF
In traditional stock market jargon, you may hear the term ‘averaging down’ … and that it can be a viable strategy over time. What does Tim Bohen think? Tune in to learn more about this old-school approach and Bohen’s take on it.
🔴 Subscribe for more free Stock Trading tips: YouTube.com/StocksToTrade
👉Share this video with a fellow Trader: https://youtu.be/w4oFcx78f2I
✅ Links we mention and recommend:
🔴Try StocksToTrade for $7: http://bit.ly/2GPqVdF
🔴Get our FREE weekly watchlist here: http://bit.ly/37UZif9
🔴Get the Traders Blueprint Free Guide: http://bit.ly/2UrZJd0
🔴Check out the SteadyTrade podcast: https://steadytrade.com
✅ Recommended video: https://youtu.be/KKQ1y7rOsFo
✅ Recommended playlists:
🔴Stock Trading 101: A Day Trader's Guide: http://bit.ly/2sqs1ZZ
🔴Advanced Stock Trading Tips: http://bit.ly/3a32pTM
🔴Trader Spotlight with Tim Bohen: http://bit.ly/36TTzG3
🔴StocksToTrade Software Tips and Tricks: http://bit.ly/375GSry
🔴Weekly Trading Recap Videos: http://bit.ly/3a32uXA
🔴Charts and Patterns: http://bit.ly/2uj2KBO
✅ Follow StocksToTrade on social media:
Instagram: https://www.instagram.com/stockstotrade/
Facebook: https://www.facebook.com/StocksToTrade/
Twitter: https://twitter.com/StocksToTrade
The idea of averaging down is buying a stock at a discount … It can be a way to lower your cost basis.
For example, say you buy a stock at $10, and it drops to $8. If you buy a hundred shares at $10 and another hundred at $8, your average cost basis is now $9. So if the stock trends back up, you’re in the green when it hits $9.01.
If you didn’t average down, you’d need that stock to get back to $10.01 to be in the green. Sounds great, right? Don’t get excited just yet.
If you’re new to day trading or trading in general, you might be trading with a small account. That’s great! But you’re probably not trading blue-chips like Amazon or Apple. Averaging down on these stocks is a totally different game.
You’re probably looking for volatile stocks, momentum stocks, stocks that trade for $10 or less. If you try to average down on a big runner, you can set yourself up for disaster. These stocks tend to spike, fail, and never come back.
Unfortunately, most traders can’t admit when they’re wrong. They refuse to take a loss. That can mean they become a bagholder. Frankly, that's the wrong mentality … and why so many traders fail.
You gotta have the right mindset. Add to winners, not losers. Adding to your cost basis may seem counterintuitive, but you’re adding to a winner. That’s what consistent traders do over time.
Adding to a loser — especially in low-priced stocks — isn’t viable over time. Maybe you’ll get lucky. But guess what? Luck never lasts. That’s not a viable means to becoming a consistent trader.
Add to the winners. Cut your losers. Let those winners run!
#StocksToTrade #TradingTips #AveragingDown
*Tim Bohen teaches skills others have used to make money. Most who receive free or paid content will make little or no money because they will not apply the skills being taught. Any results displayed may be exceptional. We do not guarantee any outcome regarding your earnings or income as the factors that impact such results are numerous and uncontrollable.
You can lose money trading stocks. Do not invest money you cannot afford to lose. You understand and agree you will consider the important risk factors in deciding to purchase any of our products or services.
I was able to average down on my amc shares and I’m in the green above 10% so it does work but I agree it’s doesn’t work a lot
I learned many years ago to NEVER AVERAGE DOWN. Only AVERAGE UP. You never want to be holding a stock in the red longer than desired.
I didn’t ask if i wanna be loser or winner. Just simple a question was how to average down
Im doing this to Palantir, i am confident will be a winner
I averaged down in steps, so bought at a lower value sold, when I sold just taking out what I put in to average down then re-bought once it when lower again and then kept repeating this so I wasn’t losing much more if it was a bust. Took a while but got in the green eventually have only tried it twice not with big amounts
My nat gas stock went down badly because of climate change and NG-F has almost collapsed…so I have managed so far to eliminate my losses by $2,000 by averaging down…only $2,000 more to go LOL…but this is a really good energy stock. So will do this with one more trade and then I will own it at its current value.
You are right sir. I will only buy a iPad when the sale is over. And ill buy 2 more if the price goes up. Great plan!
I've added to great stocks and its worked SNAP, TWTR, F, META. (held them forever though, so opportunity loss was huge over time)
I've added to sub $5 and they all dry up (volume) and eventually go to zero
I’ve always added to losers because I know some of the winners also come down…..What goes up must come down…Buy low strategy I thought and then sell high.
How? Never said ?? 👎 👎
I did just what you said not to do, but the share I’m in is unstable I agree it’s not a smart strategy to do but this cat bounced back and I got 28k usd in 2 months time 🙂 take out and put jn something else :-))
I'll admit I'm new and fomo got the best of me. I bought 500 positions in a stock at 1.51/share. Never came back up. I waited and the stock dropped to .48 and i bought 1500. Finally was able to sell in the green at .663 with new avg cost at .63.
So averaging down on high value stocks are better because they can spike fail and come back. Compared to small dollar stocks that are likely not come back, averaging down is not coming back
Doge
I did it in good fundamental stocks averaging down .. and got profit 90 percent of the time ..
Agree. Averaging down only works on good companies and/or good rule based exchange traded funds. If your position is failing, count your loss. Do not add to your loss.
Thanks for the explanation.
i don't understand how not to use downing average price, is mathematic. i've been using with stocks that i know are good companies and underpriced. i bought alibaba for 2 months and now is 14% green, and i did the same for about 10 other stocks. i don't know how to buy a share that never drop, so i buy till it stop dropping, and i'll have more shares rising
Average down on penny stocks NO
Average down on quality stocks Yes (with a system)
LOL
Where do you get your shirts
Wow so many ppl mad lol not averaging down has def saved in trading garbage stocks where ppl recommend averting down better off cutting at 2 or 3 percent and moving on great video!
is this what M1 finance does automatically with its pies?
Normally I don`t do day trading but invest in long term. I have average down on these stocks ; otter tail, republic services, waste management, tesla, pepsi, wells fargo, and telus. did I do anything wrong? I did my fundamental studies on these stocks.
You can still buy amazon, alpha, Berkshire A stocks by buying fractional shares. Great videos. You can learn a lot from you.Thanks. Very much appreciated.
I totally get it if you are a trader but what about for the investor? Specially now with a down market. I mostly DCA with a few deviation plays. On the investor side of the fence, in your opinion, would averaging down be a good strategy?
I average down on positions I plan to sale off.
What if you average down to make your loses smaller?
always buy the dips, forget this guy
Thanks for the free Info! Subbed
Have you ever added to a loser? What do you think about this old-school approach?