Averaging Down

Averaging Down is the definitive clean build of a planned averaging down schedule: an interactive entry point, up to four add levels projected on the adverse side, a running Average Cost line with a Full-Ladder Average projection, and a single Invalidation stop, with fills simulated bar by bar. Exposure bands darken where the position grows largest, and a dashboard audits fills, exposure, recovery distance, and worst-case loss.

How to Trade the Averaging Down?

• Fix the plan first: click the chart to place the Entry Point — levels, sizes, and the stop are set before anything fills.
• Add fills: a touched rung dims and gains a check mark while the Average Cost line steps toward the market; alerts cover each add and the full ladder.
• Invalidation hit: one combined stop closes the entire ladder — the plan ends there rather than improvising deeper.
• Worst Case vs cap: if the dashboard flags the full-ladder loss above the cap, size down before the first fill.

Averaging Down Settings

• Entry Point (set by clicking the chart): anchors the entry time and price.
• Direction (default Long): adds project below the entry for longs, above for shorts.
• Initial Size (units) (default 1): first tranche; add sizes are multiples of it.
• Add Levels (default 3): planned adds beyond the entry, up to 4.
• Add Spacing (default ATR Multiples; ATR Length default 14): rung distances in ATR, percent of entry, or price offset.
• Add 1–Add 4 (defaults 1/2/3/4, each × size default 1): distance and tranche multiple per rung.
• Invalidation (default ATR Beyond Last Add; ATR Multiple default 1): stop past the final rung, or a manual price beyond the ladder.
• Max Ladder Risk (currency) (default 0): worst-case cap on the dashboard; 0 disables it.
• Style and dashboard toggles: exposure bands, risk zone, labels, dashboard placement.

Frequently Asked Questions

Does the Averaging Down indicator give buy signals?

No — it plans and tracks a ladder you define. Fills are simulated gap-aware and alerts report plan events: adds, the stop, break-even recovery.

How is this different from a DCA plan?

A DCA schedule buys on a calendar without referencing price; this ladder adds only because price moved against the entry, so exposure peaks exactly when the market disagrees most. The build prices that trade-off up front — bounded rungs, one stop, a precomputed worst case.

Where should the invalidation sit?

Beyond the last add — a stop inside the ladder makes deeper rungs unreachable; a manual price violating this is replaced by automatic placement. The default rests 1 ATR past the final rung, using the anchor-bar ATR.