Adding to winners not to losers
- Thread starter noaveragingdown
- Start date
Witnessed a very tight range in the market today, possibly precarious to INTC and JPM earnings.
Once the market pulled back I used the opportunity to add 500 shares to my current JPM position.
I now own 2500 shares of JPM going into earnings with an average price of 39.25 from 5 adds.
Worst case scenario I give some gains but adding to strenght is the name of my business, will report tomorrow if this pyramid ends collapsing or at the top.
NAD
Once the market pulled back I used the opportunity to add 500 shares to my current JPM position.
I now own 2500 shares of JPM going into earnings with an average price of 39.25 from 5 adds.
Worst case scenario I give some gains but adding to strenght is the name of my business, will report tomorrow if this pyramid ends collapsing or at the top.
NAD
JPM position:
NAD
NAD
Very pleased with JPM, see no reason to sell or scale out.
Letting my good winner run.
Off to an early weekend.
NAD
Letting my good winner run.
Off to an early weekend.
NAD
Bought some SPY in the morning.
I was not around to manage it but when I came back before the closing bell it was so strong I decided to keep it as swing until Tuesday.
Have a good long weekend everyone.
NAD
I was not around to manage it but when I came back before the closing bell it was so strong I decided to keep it as swing until Tuesday.
Have a good long weekend everyone.
NAD
Price is trending up and you put on a long position on a pullback to the trend line (support at a higher low). Support holds up and price approaches the previous resistance (the previous new high in the up trend). You double your position size as price breaks though the previous high and move your stop loss on the entire position to a tick below the breakout price. If the breakout is successful and a new high is made, you know have a double-sized position, both portions profitable and you're trading with an established trend.
If the trend is intact, price will pull back to a higher low, normally no lower than the previous resistance (your breakout entry for the "add on"). If price breaks a tick lower, you're stopped out for full profit on the first half, and near break even on the second half. But if the pullback upholds the trend, price will then resume the move up to test the previous high and if it breaks to a higher high, the trend is intact and you now have a double-sized position, fully profitable. You can keep doing this until the trend stalls or breaks down.
You're adding when you have a profit to finance the "add", and you're trading on the right side of price action, meaning the odds are in your favor.
Why wouldn't you do this?
NoDoji,
Thank you for visiting my journal, I want to take this opportunity to tell you how much I enjoy reading your price action related posts in this site. You are a joy to read and a well of great trading knowledge.
NAD
Thank you for visiting my journal, I want to take this opportunity to tell you how much I enjoy reading your price action related posts in this site. You are a joy to read and a well of great trading knowledge.
NAD
As a stubborn counter-trend trader turned trend-follower, and wanting to practice adding to winners this year, I couldn't help but be attracted to this thread
I'd like to elaborate a bit more on this. You're example above doesn't contain enough information to make logical trading sense.
Let's say you're long and price broke through a previous high and made a new high and now you're up 10 points. You don't add there. If you didn't add as price broke the previous high, you hold and add on a pullback to a higher low that finds support at the trend or near the previous resistance level.
So you're up 10 points, then price pulls back 5 points to the trend line, or previous R and you double your position there. Then price breaks that last previous high by 5 points. Now you're up not only 15 points on the initial position, but an additional 10 points on the second half, for a 25 point profit.
By entering at common trend-following levels, and exiting if the trend doesn't hold, you preserve all or most of your initial profit while leveraging it further in your favor if the trend continues.
You can make out like a bandit compounding. At the same time it can be frustrating because you're giving back a good chunk of your profits. Best to find a way to compound early on the trade. Just like in trading, if you're taking bit losses you're doing it wrong.
What's great is you'll take a few small losses, a LOT of breakevens (frustrating), but then the winners you get are HUGE. It's not as easy as it sounds though. You have to establish quite a few factors.......the trend, whether it's over, how to add, risk profiles for your entries and then of course exits. You'll be surprised though how much easier the big money comes. It's good if you don't have a
"HOLD" signal in your brain, but instead a "WORRY", and take profits too fast.
I'm almost tempted to post here what I came up with as it was very profitable. Maybe i'll make my own journal though as i've got some cycle stuff i'd like to share too.
Thanks again for bringing up a great topic btw! Great thread.
What's great is you'll take a few small losses, a LOT of breakevens (frustrating), but then the winners you get are HUGE. It's not as easy as it sounds though. You have to establish quite a few factors.......the trend, whether it's over, how to add, risk profiles for your entries and then of course exits. You'll be surprised though how much easier the big money comes. It's good if you don't have a
"HOLD" signal in your brain, but instead a "WORRY", and take profits too fast.
I'm almost tempted to post here what I came up with as it was very profitable. Maybe i'll make my own journal though as i've got some cycle stuff i'd like to share too.
Thanks again for bringing up a great topic btw! Great thread.
To each his own, but I prefer to average down, not up. I am a short-term out-in-minutes trader, so maybe in my case it does make more sense to average down thank up.
It also depends on what your definition of averaging down is.
I NEVER average down when the price has broken through a support level. That's financial suicide, and I've committed a few of those early on in my trading.
If I hadn't had the chance to get in at the beginning of the trend, then I DO average down in-between the support and the price where I first got in. Keeping my stop a few ticks below the support.
Adding to winners is a double-edged sword. You must have the feel for the markets in order to NOT add right at the end of the trend. I just prefer to trade a set amount without adding another variable to an already stressful activity. I'm a high-frequency trader (20+ trades a day), so that might have something to do with it.
It also depends on what your definition of averaging down is.
I NEVER average down when the price has broken through a support level. That's financial suicide, and I've committed a few of those early on in my trading.
If I hadn't had the chance to get in at the beginning of the trend, then I DO average down in-between the support and the price where I first got in. Keeping my stop a few ticks below the support.
Adding to winners is a double-edged sword. You must have the feel for the markets in order to NOT add right at the end of the trend. I just prefer to trade a set amount without adding another variable to an already stressful activity. I'm a high-frequency trader (20+ trades a day), so that might have something to do with it.