Average Down and Hedge 101

As mentioned previously on Nov 30, I sold all my longs too early on Monday and missed this week rally. In addition I was a front runner on shorts and trapped with them. My excuse is traders would find harder to exit than to enter a position. So I managed to hedge and average down my TZA positions.

Hedge in a nutshell is insurance. It is designed to reduce a downturn risk of your positions. Buying put option or buying inverted shares are two popular methods. Average down is to buy more shares at a lower price to bring the average price you’ve paid for all your shares down. Examples of how to average down and hedge are listed below.

The numbers of shares are symbolist and not reflecting my actual positions.

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