Trying to correct a losing trade by doubling down with a lower entry price is another popular mistake. Too-much self-belief in the original trade idea, stubbornness, or the need to avenge initial losses lead traders into rushed decisions that tend to lack discipline. Our analyst Yohay Elam recalls this kind of trade as his worst trading mistake:
"I opened a Long position and began losing almost instantly. Nevertheless, the price stabilized and kept a safe distance from the Stop-Loss point. I thought that if I buy some more at a lower, more attractive price, I would lower my average entry price and eventually make an even bigger profit. I also lowered my Stop-Loss point, which is also a big no-no you have probably heard about.
Another small slide triggered the same behavior: averaging down once again and another downgrade of the Stop-Loss. Did the price then go up? No. It did not tick down either, but just crashed and hit my Stop-Loss. Eventually, I lost more money than I had planned even though the average price was lower. After the trauma, I never did this again.
There are quite a few things that are wrong here. First, you want to cut your losses quickly and let your winners run. By averaging down, you risk letting your losses run. In addition, by adding to the position, you ""marry"" it. The extra funds you put into it leave less room for other trades. It also leaves less room for any other ideas, as you are worried about the trade. All in all, averaging down can turn into a vicious cycle that you better avoid."
As Yohay points, averaging down a losing trade usually comes with lifting your stop, which heavily increases the risk of the position, normally a recipe for disaster. Boris Schlossberg, managing director and founding partner at BK Asset Management, summarizes this situation perfectly:
"The worst mistake I ever made has always been the same - lifting my stop. That always is followed by adding to the position to "even out" the price and inevitably to much bigger loss than I would have had initially. The single best advice ever given to me was - the first loss is the best."
Accepting losses is tough, but it might be one of the best skills a trader can develop. Humbleness and a limited sense of self-belief can help you avoid mistakes like the one Brandon Wendell, senior instructor and trader mentor at the Online Trading Academy, did back in the late 90s, when the tech bubble was in full swing:
“The biggest mistake I ever made while trading was to move my stop on a trade where I “knew” I was right. I knew that the markets were overheated and due for a correction or crash. My target for shorting was Qualcomm, as I lived in San Diego at the time and had many friends who worked for the company that suddenly were showing up, with new homes and cars from the profits of their stock ownership.
I shorted the stock, never thinking it could get to $1000 a share. As price moved closer and closer to my stop, I loosened the stop to stay in the losing position because I knew I was right and the markets would realize it soon enough. Finally I realized I couldn’t take much more losing and exited my position for a $32,000 loss! It seemed like hours but the whole trade took only 15 minutes!
So it was a very expensive lesson on discipline and sticking to your original plan. Had I maintained the stop, I would have lost only $1500 in the trade. The problem with moving stops or trading without them is that you are then relying on emotion instead of logic. Logic makes for good trading. Emotions make for good stories!”
Hey, at least we could use Brandon’s story for this article. This is where this kind of trading mistakes end up. Not that bad.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Editors’ Picks

AUD/USD faces potential extra gains near term
AUD/USD faced renewed upward pressure following the US Dollar’s sell-off, successfully reclaiming the key 0.6300 mark and beyond, supported by persistent optimism in the risk complex.

EUR/USD now looks to challenge 1.0500
EUR/USD gained ground for the third consecutive day on Thursday, trading within close reach of the 1.0450 level, or three-week highs, driven by a strong selling bias in the Greenback.

Gold comfortable around $2,910
Gold prices now extend the recent breakout of the key $2,900 mark per ounce troy on the back of persistent weakness in the US Dollar and diminishing US yields across the curve.

Three reasons why PancakeSwap CAKE is rallying 96% in seven days
PancakeSwap’s native token CAKE extended gains by 8% on Thursday, inching closer to the $3 level. The DEX token hit several key milestones in the last 30 days, according to an official update shared on X.

Tariffs likely to impart a modest stagflationary hit to the economy this year
The economic policies of the Trump administration are starting to take shape. President Trump has already announced the imposition of tariffs on some of America's trading partners, and we assume there will be more levies, which will be matched by foreign retaliation, in the coming quarters.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
Discover how to make money in forex is easy if you know how the bankers trade!
5 Forex News Events You Need To Know
In the fast moving world of currency markets, it is extremely important for new traders to know the list of important forex news...
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and...
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

The Best Brokers of the Year
SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.