InvestorQ : Is it a good idea to average my positions in the market?
Niti Shenoi made post

Is it a good idea to average my positions in the market?

Answer
user profile image
2 years ago


Let us assume that you bought a stock and the stock price went down. What should you do? Should you exit the stock, should you hedge your position or should you simply average the stock at lower levels? Obviously, there are no easy answers to this question as there are too many open-ended issues here. The common approach is that when you bought a stock and it went down, you were wrong in the first place. Therefore, averaging the stock would be equivalent to being wrong twice. That may again be a very simplistic argument. There are four key issues that you need to consider when you take a decision to average or otherwise on your position. It is not that the idea of averaging is entirely wrong. There are instances when people have averaged and made money in the markets. But as a discipline, it is not really advised…