Royal Rumble
Let's go:
AVERAGE IN:
Pros:
1 A more 'humble' way to trade. Not top/bottem picking. Giving the position some breathing room to work itself out.
2 Less stressful as the initial positions are fairly small and there is very little concern if the market moves against position as you can always average down.
3 Don't need to use stops - hence - panic sell at the bottem and panic buy at the top. More breathing room to get out at smaller losses.
Cons:
1 Invites the dangers of overtrading. You can average in and out all day or too frequently.
2 Less stess can mean less focus.
3 If not using stops then you can easily get 'married' to the position thus watch losses grow and grow or profits shrink and shrink.
ALL IN:
Pros:
1 Promotes the sniper type of mentality as there is very little room for error.
2 Less overtrading as you get one shot to nail the entry and exit.
3 Using stops limits losses and promotes not getting stuck on the position.
Cons:
1 More stress.
2 Using stops probably means 10 minutes later most times the market will be trading in a position where if you had held you'd probably have a much lower loss if not breakeven or small profits.
The Bottem Line:
Know what you're doing - nearly every strategy has advantages and disadvantages and you have to know both - especially the disadvantages.
Let's go:
AVERAGE IN:
Pros:
1 A more 'humble' way to trade. Not top/bottem picking. Giving the position some breathing room to work itself out.
2 Less stressful as the initial positions are fairly small and there is very little concern if the market moves against position as you can always average down.
3 Don't need to use stops - hence - panic sell at the bottem and panic buy at the top. More breathing room to get out at smaller losses.
Cons:
1 Invites the dangers of overtrading. You can average in and out all day or too frequently.
2 Less stess can mean less focus.
3 If not using stops then you can easily get 'married' to the position thus watch losses grow and grow or profits shrink and shrink.
ALL IN:
Pros:
1 Promotes the sniper type of mentality as there is very little room for error.
2 Less overtrading as you get one shot to nail the entry and exit.
3 Using stops limits losses and promotes not getting stuck on the position.
Cons:
1 More stress.
2 Using stops probably means 10 minutes later most times the market will be trading in a position where if you had held you'd probably have a much lower loss if not breakeven or small profits.
The Bottem Line:
Know what you're doing - nearly every strategy has advantages and disadvantages and you have to know both - especially the disadvantages.
