Don’t Average Down

One of the things I have learnt recently is to never average down.

It may work for others, but I know it will not work for my own style of day trading.

I’ve averaged down in the past thinking I could make even more when the price eventually moves back in my favour, but it almost always ends with big losses, leading me to get even more emotional and sometimes even revenge trading.

Very bad. Very very bad.

I trade based on short-term trend, and it’s quite apparent after 1 or 2 candles whether my trade is going to pan out or not.

So therefore, nowadays if it looks to me like the trade isn’t going to pan out, I’m just happy to get out at my stop-loss and move on to the next trade.

I may decide to average up a little if the trend is moving well.

But average down? Nope, never again.