My own idea, is that one needs to see a 30% decline from the original position, to get a 15% average down. Is 15% a reasonable play? If the stock keeps on falling through the 15% level then it is doubled up.
The real problem is that the markets [smart money] has programmed one to think what levels are reasonable. It has been a buy the dip market for so long, that is how we all think.
I have a large position in Kina Securities, a PNG banking stock, substantially under water. I got this headache through averaging down, too tight to my initial purchase price.
The markets now, USA and AUS, are backfilling day on day. How people trade exotic options plays, and not lose all their money is only possible if they have the power to put the price where they want it.
