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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
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*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.

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