Averaging Down... and Stop Loss.. Do They Conflict?#BuiltonSolayer

Averaging down and stop loss do not necessarily conflict, but their misuse can be contradictory.

✅ When do they not conflict?

If averaging down (i.e., opening additional positions when the price drops) is used within a well-thought-out plan and with a clear definition of the maximum loss level (Stop Loss), then they can complement each other.

For example:

You enter a trade at 100

You average down at 95 then at 90

And you set a final stop loss at 85

This means you give the trade a chance, but you do not allow it to drain your capital.

❌ When do they conflict?

When you average down without a plan or continue to average down every time the price drops, without using a stop loss, it can lead to significant losses that are difficult to recover.

It's like saying: "I will never exit and I will keep averaging down until the market reverses its direction," and this is dangerous thinking.

In summary:

Averaging down without a stop loss = High Risk

Stop loss without an averaging down plan = Sometimes early exit

The best = A plan that combines smart averaging down and a well-considered stop loss.