Glossary

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Averaging
To average is to consistently buy or sell the shares of one issuer as the value of the financial asset decreases/increases, in order to maintain the average price at which the shares have been bought/sold. For the Forex market - averaging is a consistent purchase/sale of a currency pair, if the exchange rate is moving in the direction that is unfavorable to you, in order to maintain an acceptable distance between the opening price and the profit order. Averaging is a technique that is often used by experienced traders. However, beginning traders who do not quite "feel the market" yet, should better postpone using this method until later on. Also, it is better to average the positions only upon receiving the signals from a trading system. Only in this case there is a large probability of generating a profit upon a closure of the transaction. Besides that, in order to average, a trader must be sure that the price will, sooner or later, start moving in the right direction, and have a sufficient deposit as to hold the losing position for a long period of time.

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