How do you know when it's right to double-down on a losing position?

ChaosNantuko answered 10 months ago …

From my experience, doubling down is very rarely - if ever - a good choice. Yes, you might win, but you'd probably be far better served investing somewhere else. The only time doubling down might be a good choice is if you start seeing highers lows and higher highs. This indicates that the trend in the stock may be changing, and - if your original reason for buying still holds - then doubling down may yield profits almost right away. Even so, when doubling down, be very careful, and i'd strongly advise a stop loss. Just like you can theoretically lose an infinite amount of money when shorting a stock, you can also lose a limitless amount of money if you continually double down. Approach with caution.