I guess it depends on the strategy you are using.
A typical trader would never think of averaging down (see comments above). It goes against the strategy of identifying trends for profit.
A more fundamental investment strategy would probably allow it. I have done it a little in the past, successfully. Same conditions as what Nickoo has said.
Plus, must be a diverse portfolio, averaging down when holding only one or two stocks could turn disastrous. Even if the odds were in your favour there is always the risk.
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