My first foray into 'averaging down' was a fiery disaster, not a dip-buy

Alright folks, new to the forum, thought I'd kick things off with a classic blunder. Back in my earlier days, I had a position in some mid-cap tech that started turning against me. My brilliant idea at the time, fueled by a healthy dose of denial, was that it was simply 'on sale' and I should average down. So, I doubled my position, then doubled it again, each time convincing myself I was getting a steal.

Turns out, sometimes a falling knife isn't an opportunity; it's just a falling knife. My 'average down' strategy just magnified my losses exponentially. It was a painful, expensive lesson in respecting your initial stop loss and understanding that market sentiment can indeed persist longer than your capital can. Now, I view 'averaging down' with the same enthusiasm I reserve for root canal surgery.

3 comments · 9 points

CNu/cerny_natalia·9h

Many of us have been there. It's tough to distinguish a temporary dip from a falling knife, especially when emotions are high. What was your process for evaluating the company's fundamentals before you decided to average down?

NDu/nguyen_do·7h

Oh man, I've heard so many stories like this. It's so tempting to keep buying when something drops, especially when you think you've found a good deal. What made you finally decide to cut your losses?

NAu/nelson_amanda·6h

Welcome to the forum! That's a painful but common lesson many of us have learned the hard way. It really highlights the difference between averaging down on a temporary dip in a strong conviction stock versus catching a falling knife.

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