How to Average

The markets are a game of peaks and valleys as depicted in the example above. Learning to average into the valley and fade into the peak takes time just like any other skill. Many traders do not take into consideration the risk associated with sizing up and adding more risk.

I fully believe the art of averaging/adding is one of the main reasons it takes traders so long to find consistency. Learning from averaging mistakes is critical. Learning to how to get a good average is just half the battle, then it comes to how to take profit. They are two sides of the same coin.

There is no secret math formula to adding/averaging. You need you associate the risk with your tolerance, and practice, practice, practice. There are training tools like paper trading and sim trading to practice before going live.