Should I average down on this losing position?

How this is calculated

• Each checked statement adds one point, out of 8 possible.
• A checked stop-loss, the first statement, is the single biggest red flag on this list. Adding size below a level you already decided was wrong moves the goalposts after the fact.
• A score of 0 to 2 suggests this may be a defensible add if it was part of your original plan and your thesis is still intact, though it still needs to fit your position-size and loss-limit rules.
• A score of 3 to 5 suggests this looks more like chasing a loser than following a plan. Revisit your original thesis before adding.
• A score of 6 to 8 suggests strong red flags, the classic signature of doubling down to avoid admitting a loss rather than a planned add.
• Averaging down can be a legitimate part of a strategy when it's scaled into at predetermined levels chosen before entry. The difference this checklist looks for is whether the add was planned in advance, or is a reaction to the trade going against you.