A.I.M. Users Bulletin Board

[Conrad]

I am not Fuzzy, but I also understand that

. . .buying while averaging u is fine till the price stops rising. If the trader can sell quick enough then it is OK of course but then he should sell all!. . . that is clear. The danger is of course that in a price reversal the (panic)Sell Order may well be at the back of the queue and might be executed when the price has seriously dropped. . Big Damage to the Portfolio!

Especially this upward buying is often killer for Margin Traders. The whole idea is "sold" by brokers to make clients(victims?) buy without any assets behind the them and on the buzz of rising prices. When the margin trader steps out in time it works fine, but greed probably prevent him from doing so, at a price reversal the Sell Order might well too late and be at the end of a large queue. The margin trader could end up with a huge debt, which he probably can't pay off.