Scale in

A process of incrementally buying shares as the price decreases. Scaling in on a stock will ultimately reduce the average purchase price of a stock. For example, ABC stock is at $5 a share and an investor bought 10 shares, then bought more at $4.50, $3.00 and $2.75.

If the price of the stock recovers the investor can maximize gains from scaling in. However, most investors has a bottom limit on a stock that falls, in that case the stock is sold altogether at a loss.

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