Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: fahrenheit451 who wrote (22861)	8/1/2006 6:25:29 PM
From: shres	Read Replies (1) of 42834

"...Even worse is the practice of adding to a losing position so as to "average down". This is a recipe for disaster. It is essential to limit (and accept) losses in advance, in accordance with your trading plan, by predetermining your exit point if the stock price moves against you. Stop-loss orders provide a convenient method of doing this." Hmmmm. I have seen some newsletter writers who routinely average down as the price falls below their initial recommended price. They say the stock isn't really falling...it's just getting cheaper. LOL! In fact, if you set automatic buy levels below your initial recommended price aren't you violating this well-known cardinal prohibition against averaging down? OTOH, I guess it's relatively easy to continuously double down as the stock tanks if you are just playing around with fantasy money and not real cash like the subscribers.

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