“Losers Average Losers” - what does it mean? 😮
This quote comes from legendary trader Paul Tudor Jones. He printed it out and pinned it above his desk to remind himself of one thing: Never average down on a losing position.
😭 Averaging down means adding more to a trade that’s already in the red, hoping the price will bounce back and bail you out. It’s usually driven by ego or denial, not logic.
Say you long stock at $100, it drops to $90, and you buy more. Then it drops to $60 and you buy again. You’re now sitting on three losing positions — all based on the same idea that already was proven wrong.
📉 If the market keeps falling, your losses multiply. What could’ve been a small, manageable hit becomes a disaster. That’s why Jones said:
Only a loser would double down on a position that’s already taken a significant hit.
🙅♂️ Some people confuse this with DCA — dollar-cost averaging. But they’re not the same. DCA is a strategy for long-term investing in strong assets, like SPX. You’re buying consistently over time, regardless of short-term price swings.
What we are talking about here is related to trading, when you refuse to accept you were wrong and try to fix it with more money.
Good practice is to set a stop loss every time right after you open a trade. Don’t fight the market. Take the loss, protect your capital, and move on 🧠
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