Averaging - A speculative term; increasing purchases or sales, as of stocks, when the market is
pursuing an adverse course, for the purpose of improving the position of the buyer or seller in the
matter of price.

Illustration: One hundred shares of stock are purchased at Too and the price declines to 98. At
the last named figure 100 shares more are purchased, which makes the average price for the 200
shares 99. Then, if a recovery to 99 takes place the operator is even; if it extends to 100 he has a
profit.

Again, 100 shares of stock are sold short at 100 and the price advances to 102. At the last-named
figure 100 shares more are sold, which makes the average price for the 200 shares 101. Then if a
reaction to 101 takes place the operator is even; if the reaction extends to 100 he has a profit.