When to Use Averaging Down When to Use Averaging Down as an Investment Strategy
As an investment strategy, averaging down involves investing additional amounts in a financial instrument or asset if it declines significantly in price after the original investment is made. While this can bring down the average cost of the instrument or asset, it may not lead to great returns. It might just result in an investor having a larger share of a losing investment, which is there is a radical difference in the opinion among investors and traders about the viability of the averaging down strategy.
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