daytraders after market lounge 9th may 2012, page-27

stops and averaging up is how you make money


say you like a stock and want to put in 10 grand, its at 50c


you buy 3 grand worth at 50c and set a stop at 45c

it goes up you buy 3 grand at 55c and move your stop to 50c

it goes up again you buy 4 grand at 60c and move your stop to 55c


you now have 10 grand worth at 55c and the price is 60c

you are in front and you were correct




you buy 3 grand at 50c and the price drops to 45c, you are out and you lost stuff all, you were wrong



THIS METHOD GETS YOUR MONEY INTO GOOD CALLS AND GETS YOU OUT OF LOOSING TRADES WITHOUT LOOSING MONEY




sure you have a few average trades and plenty of sells and buys



averaging down and not setting stops is the worst thing you can do, you are wrong get out