Averaging down

Averaging down

It is the practice of bringing down the purchase price of a stock by buying more unit at a lower price. Traders do this when the price of a stock has fallen considerably.

Let’s say – an investor buys 100 shares of a company at ₹10 / share. Now if the price falls to ₹ 5/ share, he can buy 100 more shares and bring down the cost per share to ₹ 7.50

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