InvestorQ : Have there been cases of traders making money by averaging positions?
Maniish Lofar made post

Have there been cases of traders making money by averaging positions?

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Maniish Lofar answered.
3 years ago
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At the outset, there is a very famous case but a work of caution. Don’t try to replicate that game. The most famous case, where averaging worked, was of John Paulson in 2007 who kept adding to his short position on US sub-prime for a full 2 years. It was the most successful trade in history, but it is anybody’s guess what would have happened to Paulson if the sub-prime euphoria had persisted for another year. Remember, Paulson is a case study not a template. So don’t try to take any lessons from the case of John Paulson. Things could have been very different if the uptrend had persisted for another year. Like in the LTCM, Paulson may have been eventually right but it may have been too late for survival.

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