Warren Buffett would beg to differ with this strategy.
If you trade on value, you shouldn't really care what the market is doing. If risk is mispriced, buy more, even if the price is going down and you are losing money in the short term.
That presupposes you're right. But there's no way to know this for sure in advance, besides which nobody's right all the time. To do as you advocate guarantees that your losses, when they do come, will be maximal.
If you trade on value, you shouldn't really care what the market is doing. If risk is mispriced, buy more, even if the price is going down and you are losing money in the short term.