Averaging, not an infallible way to make money

i.What is averaging:
Averaging down is a strategy to lower your average cost in a stock that has dropped in price by buying more at a lower price, resulting in a lower average price of the total purchase.

ii.Losses can increase if the price falls further:
In most cases, you don’t know enough about the underlying company to determine if a drop in price is temporary or a reflection of a serious problem. Thus, averaging in such stocks can result in increased losses.

iii.Averaging can be done while investing for long term:
If you are investing in a company, you have done your homework and know what’s going on within the firm and its industry. You should know if a drop in the stock’s price is temporary or sign of trouble. Then, you can go for averaging after careful research.