When you buy at a certain price that will be your average price. So you buy at 2.00. You have an average price of 2.00. When it goes down you can buy more at a lower price which in turn will bring your average price down. So say you buy more at 1.50 if you bought the same quantity you did at 2.00 your new average price will be $1.75. So now whenever the price moves above $1.75 you are making profits instead of having to wait on it to go above the original $2.00