Scenario 2

A corporate sells $2 Mio in the long forward range of 8 months when the spot was 46 with the expectation that Rupee is likely to appreciate now. But when the spot hits 48.00 the corporate sells $2 Mio over and above his order, to minimize the MTM loss and to average it out. But now the spot is 53.00 and the corporate is now less on his limits plus the banks are now asking for more security.

Why averaging out is not always a good idea?

Source: India Forex