Why do I get trapped more when I try to average down? Brother Liang deeply analyzes the core differences between passive averaging down and active averaging up.

A must-read pain point for beginners: “Brother Liang, I’m trapped, can I average down to lower my cost?”

Brother Liang clearly warns: The first reaction after being trapped is definitely not to average down! This is a fatal trap that leads from floating losses to deep traps.

1. Passive averaging down = a road of no return

1. Contradicting market trends: Breaking through key support is the market telling you “you judged wrong,” and averaging down at this time is using funds to fight against the trend, which shows a lack of respect for the market.

2. Fantasizing about unlimited funds: The underlying logic of the averaging down strategy is “unlimited bullets, the target must rise,” but the reality is that funds are limited, and declines have no bottom, ultimately leading to being fully trapped.

3. Destroying the mindset: Deep traps consume not only money but also time and mindset; passively waiting causes countless missed opportunities and subsequent operations become mistakes.

2. The correct first step: Actively cut losses, gracefully admit mistakes

Brother Liang's core principle: First learn to cut losses, then learn to make money!

· Accept small losses: Strictly control the extent of losses and eliminate large losses; this is the first rule of survival in the market.

· Execute stop-loss: Cutting losses is not admitting defeat; it is about preserving capital and the opportunity to fight again.

· Set an observation period: If you cannot decisively cut losses, set an observation period of 2 hours/2 days; if the price does not return to the cost zone, decisively exit.

3. Three death signals, never average down

1. Market trend breaks downward: Under systemic risk, individual stocks find it hard to stand alone.

2. High-volume breakouts at highs: Panic selling from funds, with huge potential for further declines.

3. Low-volume decline: The target is ignored, with further lows beneath; averaging down is like catching flying knives.

4. Active averaging up = chasing victory

Brother Liang emphasizes: Oppose passive averaging down, encourage planned active averaging up!

The core difference between the two: one is a lucky remedy after making a mistake, and the other is increasing positions during a winning streak.

Three major prerequisites for active averaging up:

· Position: A relative bottom after sufficient adjustment.

· Plan: Develop a phased layout plan in advance.

· Signal: Positive technical signals such as stopping declines, stabilizing, and increasing volume should appear, rather than “averaging down when it drops.”

· Discipline: After buying in phases, if the trend strengthens, hold the position; if it hasn’t started, wait, and never add blindly.

Learning to cut losses is the starting point of becoming a qualified trader.

Surviving is always more important than making a single profit!

Brother Liang's iron rule: Never passively average down, safeguard the capital lifeline!