I’ve seen two ways of thinking when it comes to pound/book/dollar cost averaging.
First is the one you describe, where it’s a case of when the share price drops, rather than having a stop loss trigger, you use that as a reason to invest more into the business.
Personally that involves having more cash liquid (or selling a well performing holding to free up cash) and throwing money at a company just to double down my investment and trying to make the most of a falling knife. It’s the approach loved by real die hard value investors which I’m not.
The approach I prefer will hopefully answer your question. Regular investing regardless of the share price.
This means I have a set amount of money I fund my portfolio with each month, and it’s split across my investments at roughly the same allocation I originally setup. I do change the percentages as time goes on if I no longer think a stock is a buy (just a hold) and naturally if I am planning to sell.
When you buy as the stock dips you are lowing the book cost you have paid for the whole investment, which hopefully means bigger gains and returns in the long term.
Regularly investing regardless of the price means the book cost will roughly follow the trend of the investment, if it has slowly increased over the last year then your average book cost will do the same.
That said I prefer time in the market rather than timing the market. If I believe the stock will perform well then I will keep funding it with more cash.
I use stop losses to trigger on 5-10% dips from highs were I am comfortable exciting, meaning I don’t really get the chance to buy the dip, and I like not having the temptation to!
Where possible I try to let my winner runs and cut off my losers. Let the good stocks go for as long as possible and slowly increase the point where I would sell so I can lock in a profit. Stocks which start dipping will hit my risk tolerance and be sold. I’d rather sell at my comfortable risk level than end up with a nasty hole in my portfolio (which has happened more than once to me!)