What is Averaging down?

**Averaging down** is a strategy where an investor buys more of an asset (such as stocks) at a lower price than their original purchase price. This lowers the average cost of the investment. The idea is that if the price of the asset drops, purchasing more at the lower price can reduce the overall cost per share, potentially improving the chances of making a profit if the price rebounds. However, this strategy comes with risks, as it involves increasing exposure to a losing position, and there's no guarantee that the asset will recover in value.