Is Averaging up Good?

The idea is to lean into your winners. Averaging up into a stock increases your average price per share. ... This would bring your average purchase price to $26 per share. Averaging up can be an attractive strategy to take advantage of momentum in a rising market or where an investor believes a stock's price will rise.

Is averaging up good or bad?

Professional investors and successful traders don't average down — they average up, meaning that they buy more of a stock they already own when it is increasing in price. When shares begin to move higher after your initial purchase, it may be a sign that this penny stock is beginning to move in the right direction.

When should you average up on a stock?

Averaging up in this fashion ensures that your average cost doesn't run up too fast, yet allows you to funnel more money into a potential big winner. Some investors prefer to average up any time the stock rises a certain amount from their previous purchase price, while others like to wait for specific chart set-ups.