Practical Trading Psychology Tips: Adding to Losing Positions is the Most Fatal Mistake Adding to losing positions, trying to average down costs, essentially stems from our unwillingness to admit we're wrong. Many people add to their positions after a loss, thinking, 'With a lower average cost, even a small rebound will get me back to break-even.' But losses happen for a reason—the market is telling you that your direction is wrong. Adding to losing positions will only amplify the losses, and you're more likely to lose even more. The right approach: Losses are a signal. Either cut your losses and exit, or confirm that the direction hasn't changed before holding on. Never add to a position just because you're losing.