DEFINITION of Double Up
An investing strategy "doubles up" when a trader doubles his or her current position in an asset, generally after an adverse price movement event. By doubling the risk, the trader hopes to earn a larger return when the security moves in a favorable direction.
BREAKING DOWN Double Up
When executing a double-up strategy, the investor believes that the latest adverse price fluctuation is only temporary and will shortly correct itself. To capitalize on the price reversal, the investor amplifies his or her current position. Doubling up is a risky strategy, but it can yield large returns.
Example of Doubling Up
To double up simply means to buy more of a security in which one already has a long position after a price decline. For example, one may buy 500 shares in Company A at $50 per share, and then 500 more when the price declines to $35 per share. In this instance, someone is said to double up on a security because they are exceedingly confident in the stock's long-term prospects.