Doesn't that necessarily mean that you have a sizeable chunk of cash initially? So that when/if the stock goes down you have money available to buy more shares.

And when/if the stock goes up you will be selling a winner? Why would you want to do that? Shouldn't you be keeping the winner?

The idea is that your PORTFOLIO increases in value, not that one particular piece of the portfolio goes up. The portfolio in this case is stock+cash. That's what you want to maximize.

The maxim is "buy on the way up, sell on the way down". This does the reverse. Sell as soon as it goes up. If it keeps going up and up -- which is what we want to happen -- and your portfolio asset allocation is going to be very cash heavy and very stock light. I don't much care if my cost basis has been reduced from $23.22 to $22.12 if my original 50/50 portfolio is now 90% cash and 10% stock.