[Sharing thoughts] Averaging up and down

Scaling UP. Increasing one's position in a counter.

When i started investing, i read about bloggers who bought in REITS cheaply during the GFC (2008) and built up a super strong recurring stream of passive income. But when i tried doing it in 2016's correction, it felt terrible! I keep tracking the counters, and eventually relented by selling away the stock (taking a loss) only to see it rebound. 

After i found mentorship with my NS friend, who was trading full-time for himself, i learnt to scale-up, and posted about it (here). In my journey thus far, scaling-up has helped me achieve milestones! I have more 4-digit figure type of profits after i learnt to scale-up, and i even achieved my first 5-digit figure trade profit (here).

Lately, i pondered what it meant to add more positions. 

Generally, there are two school of thoughts: 

• the average down-ers are likely to be fundamental-based
• the average up-pers likely to be technical-based

While both are intended to "earn more money", their execution on the same class of assets (equities) were in opposites. I suffered a mental disjoint as i tried to reconcile it. Then it dawned upon me that it was just a difference in perspective.

Illustration

e.g. for those fundamental-based doing income investing, normally scale in when prices are lower, as  the intention of is to increase the average dividend yield % of their existing positions.

e.g. for technical-based trend trading, they normally scale up when prices get higher, as the intention of increasing is to ride on the trend to amplify the capital gains of having made a right trade.

To sum up, both types of investors are looking to improve the percentage of what they desire (Yield or capital gains). Thus, we just have to be clear what are we looking for and deploy the right technique at the right time.