Averaging

With the averaging (averaging.as for all several articles of them), it is one of the buying and selling technique of the market price including stocks.

When a price falls after buying it, and having built it, it is technique to lower the buying price (mean acquisition cost) per one in what I buy it with a lower value and increase and do. Because a mean acquisition cost lowers, disposing is enabled for the loss that profit is minimal ・± 0. to appear even if there are few later gains. This is "averaging buying". When the stock prices rise after having made a bear position, there is "averaging selling" to sell in the prices after the rise more, and to increase, and to do.

An example: If when declined to buying, 800 yen, buy one plant one for 1,000 yen more; the average price is 900 yen. Profit appears afterwards if I come back to 901 yen

If a price returns, I can obtain a profit as above, but a loss is added as expected when I fail.

An example: The loss goes up because of the speed of the double if it falls from 800 yen in an upper example more. If if the loss for 600 yen does not perform averaging, make -400 yen, averaging; -600 yen.

The technique of the averaging reduces the probability that business becomes the loss. However, the amount of loss spreads to several times depending on the situation when I am unsuccessful after all. Averaging is only exchange of an advantage in the probability and the disadvantage in the amount of loss after all. I am only on the condition that I trade it small by adjusting a position so that it is to the amount of expected loss cut even if all positions were over for a loss by averaging of the temporary fall, up-phase that it does not go against a main trend of the market price including buying on a weakness and the selling before full recovery that averaging is permitted besides.

If it lasts for a long term, and the stock price of a certain company continues falling and continues averaging in the situation that finally went bankrupt, I may only suffer a fatal injury of the irretrievability by one business. Therefore there is a thing to warn of the risk of the averaging including "an incompetent averaging poor person" for a market price proverb.

Allied item

• Loss cut (as for the loss)
• Food preserved in salt
• The dollar cost average method

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This article is taken from the Japanese Wikipedia Averaging

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