Addicted to Average Down?

Quote from Pension_Admin:

No, I never did. I did some calculation on a spread sheet using my strategy and it showed that the result would be the same rather I average down or not.

So, I do the opposite.

PA
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I actually did the statistics, and average down does work... But with averaging down you need to pay very close attention to your risk and position size and when you average down.

For example, let's take Apple. Say you invested in Apple at 220. Well averaging down at that level is a great way to break the bank. Unless of course you have enough money. It requires oodles of money.

On the other hand I have invested in Apple twice and I have averaged down multiple times. And each time made more than 70% returns. Though when I put the first chunk of change into the company is the question, and one that I am not willing to answer since my statistics were on the entire stock portfolio of the US exchanges.

Of the 100+ stocks I have invested in I would say only with 10 stocks I lost money (GM, C, TOM2, GRMN, ESLR, NWPX, and a few smaller positions). With GM, and C I cut my losses. Whereas with TOM, and GRMN I stopped adding to my positions since the size of the position exceeded my risk profile. Then when I had a chance I exited with some losses.

Averaging down requires a contrarian perspective, and one that very few people want to do. It requires catching falling knifes and leaving money on the table. Not an easy thing to do. I do it because it makes money consistently for me.
 
I think the major problem with average down is that it cause maximum damage that ruin lives.

It's fine when everything is under control. It's relatively easy to make money when you are averaging down. However when things got out of control, that's when it does maximum damage.

Average down is the opium of the trading mass.
 
Quote from christianhgross:

I actually did the statistics, and average down does work... But with averaging down you need to pay very close attention to your risk and position size and when you average down.

For example, let's take Apple. Say you invested in Apple at 220. Well averaging down at that level is a great way to break the bank. Unless of course you have enough money. It requires oodles of money.

On the other hand I have invested in Apple twice and I have averaged down multiple times. And each time made more than 70% returns. Though when I put the first chunk of change into the company is the question, and one that I am not willing to answer since my statistics were on the entire stock portfolio of the US exchanges.

Of the 100+ stocks I have invested in I would say only with 10 stocks I lost money (GM, C, TOM2, GRMN, ESLR, NWPX, and a few smaller positions). With GM, and C I cut my losses. Whereas with TOM, and GRMN I stopped adding to my positions since the size of the position exceeded my risk profile. Then when I had a chance I exited with some losses.

Averaging down requires a contrarian perspective, and one that very few people want to do. It requires catching falling knifes and leaving money on the table. Not an easy thing to do. I do it because it makes money consistently for me.
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Instead of averaging down, why not just get out of the position and get in at a better price with the same size?

BTW: Do you use margin?
 
people were willing to invest 68 million in him thinking they could get 1% a week

there are guys here who say 10% a week, or 100% a month is easy. just imagine how much money they could attract from investors! omgzzzz
 
From hindsight, If you bought ES in average down, on every 10 points drop since March 2009, you would have made a killing. It depends on the market(trend vs range), and size of your account.:D
 
Quote from adadadog:

From hindsight, If you bought ES in average down, on every 10 points drop since March 2009, you would have made a killing. It depends on the market(trend vs range), and size of your account.:D
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Well, sometime even if you have a trillion dollar trading size (like LTCM), it will not work.
 
Quote from Stosh:

I have found that averaging down is an excellent strategy when prices bottom and trend up soon after your purchases. I may write a book about this strategy. Stosh
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You might want to write about how to identify bottom and what to do when other found out about the strategy which cause it to not work anymore.
 
Quote from BPtrader:

the article is about a ponzi scheme, it has nothing to do with "average down."

what is wrong with the reading comprehension of you and those who responded to you?
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Look at his consistent returns from before and his promise of 1% per week, and look at how he doesn't have a dime anymore will give you clues on what he did.

I don't think he was running a ponzi until investors started demanding returns. He lost it all in the market.
 
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