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Addicted to Average Down?
- Thread starter Pension_Admin
- Start date
Quote from Pension_Admin:
My question to you will be, would you ever get desperate enough to mortgage the house or borrow money from family and friends to average down--especially considered how your consistent your return was using the average down strategy?
PA
Nope... Because my wife would not let me! Seriously, my wife would not let me. My wife runs the budget, while I choose the investments. And we are conservative.
Because we have already been blown out of the water.
Around 1997 just after we graduated from university my father contracted cancer. So we bought my parents house, and this was Germany. At the time Germany was going through a housing bubble. Forward a couple of years and we needed to sell the house. We bought at the absolute worst time and we had to take a 30% hit on the house price. For two years we paid a mortgage to a house we did not own anymore! That experience has made us very very humble.
LOSERS AVERAGE LOSERS
If you are wrong and you average then you increase your risk.
If you turn out being right after averaging, then you reinforce a bad habit in your mind that will one day come back to bite your a$$.
Before every trade 3 things should be defined.
Entry
Exit
Stop
Averaging down is a good strategy if you have a 20+ year time frame and do it in indices.
If you are wrong and you average then you increase your risk.
If you turn out being right after averaging, then you reinforce a bad habit in your mind that will one day come back to bite your a$$.
Before every trade 3 things should be defined.
Entry
Exit
Stop
Averaging down is a good strategy if you have a 20+ year time frame and do it in indices.
Quote from christianhgross:
Don't laugh, but I have a 6 digit account trading account, and when I enter stocks I buy 200 USD at a time. That is my rule. 200 USD sounds crazy, but I will average down max 10 times before I stop. Thankfully for IB it only costs me a dollar.
Do you also average up?
Quote from efficiency:
... Averaging down is alluring, and the reflection of a gambler. Comforts a bruised ego. Averaging down, aka a Martingale, is compounding a mistake. ...
Indeed. If there is no method or rules or evidence for the average down then it is purely gambling.
Martingales are very doable if you have an buff enough account and clean rules for flipping directions.
I've used them very successfully before I became a technical trader. As a technical trader with money management ... I don't use them often, though I have a complete system developed that has worked well in both back-testing and play moneys.
I've also lost huge with Martingales prior to becoming a technical trader. (Gambling in the Market)
I've won at Roulette quite substantially using martingales as well.
Overall ... it works if you have rule sets and money management and you have a successful system to capture candlesticks.
Averaging down is not for the feint of heart, or unskilled trader.
When you average down, are you really winning or are you just borrowing money from the market in which you will have to pay back with interests?
Hi. I'm Candace and I'm an addict. I used to enjoy averaging down only occasionally. No one needed to know. But as time went by, I grew to love it, to depend on it. Always right, what could be more seductive? I live for that moment after a huge drawdown, when the trade turns positive and I close the position, sweet relief washing over me. Eventually I found those perfectly timed trades disappointing. What was the point of painstaking analysis when I went in with puny size and had no desire to average up? Preemies, I call them. Premature profit, showing up before I get a chance to average in properly. Those trades don't annoy me for long. I shut those preemies down so I can allocate the funds to address those nasty red patches on my screen. They sit there, like ugly blemishes on a meth addict, requiring me to be at the ready to twitchily alt-tab them away when someone approaches. Itâs all good though, secrets are exciting.Quote from Candace:
Do you also average up?
I know Iâm not alone. I used to visit the journals of other ADAâs (average down addicts) when I was feeling unsure of myself, but I've witnessed too much pain and drama over the years. Perhaps we should all just use in private. Probably best not to discuss it.
I used to be addicted to Average Down, then I found Tuscan Whole Milk, 1 Gallon, 128 fl oz and haven't used Average Down since.
Quote from Candace:
...I know Iâm not alone. I used to visit the journals of other ADAâs (average down addicts) when I was feeling unsure of myself, but I've witnessed too much pain and drama over the years. Perhaps we should all just use in private. Probably best not to discuss it.
Hi Candace,
Thank you for the posting and your honesty. I think we all know averaging down is bad and will eventually lead us to ruin, but some of us still do it anyway. It is a pure addition, much like gambling in a casino. We know the odds are against us, but we'll gamble anyway.
It is a dangerous addiction that could cost more than what we bargain for. We need to eliminate it.
PA