Averaging down
Averaging down is buying more of a position as price falls against you, which lowers the average price but raises the risk on a trade that is already going wrong.
In Bitcoin’s fall from January to February 2026, buying 0.1 BTC at 95,567 and another 0.1 every time the close was 5% lower gave five buys and an average of 79,734. At the 5 February close of 62,868 the open loss was $8,433. The same idea with a stop of 10% of the daily ATR would have cost $25.
Learn more: the most common mistakes new traders make and why you should never average down.