Person A have 10k
Person B have 10k
Person A buys stock for the whole 10k at 100
Person B buys devides his 10k into 20 parts and buys every 5% drop all the way down to zero
If the stock goes to zero , both of them lose the 10k
If the stock drops and stays under 100 then Person A is stuck until it recovers
Now
Person B have some control over his position cause he can average down
He can always stay near the price and just needs a little push to close
The argument that u will lose our money averaging down goes also for the buy and hold if the stock tanks
Now if the stock shoots up from 100 to 150 then person A will make more profit
But how many times did u actually buy anything and it shot up 50% I bet out of 100 people maybe 5 of them experienced that statistically
So what's the argument against averging down other than stock going to zero
It beats buy and hold all the time statistically
Why use a stop loss if I I can control thr position with the right money management ?
Why take a risk of buying for the whole 10k at certain price and getting stuck ?
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