Averaging Meaning

Averaging

Averaging Up Definition

          Averaging Up is an investment strategy in which additional amounts are invested in an asset as its price rises. This will raise the average price paid for all of the shares, but that average cost is still lower than the security's current market price. The profit is the difference between the average cost and the current price and protecting it necessitates selling while the stock is rising or shortly after it has peaked.

Averaging Down Definition

          Averaging Down is an investment strategy in which additional amounts are invested in an asset if there is a substantial drop in its price after the original investment is made. This course of action is used by investors who plan to hold the assets for an extended period of time, have long-term investment goals and typically invest against the current investment trend.