Average down disaster

[Anaconda]

Quote from innovest_11:

Down -5000 because of using averaging down today, keep buying when it goes new low, and it keeps dropping and dropping and droppinggggggggggg...........................

Initial loss of -$1200 balloon to become -$5000. Cannot believe my months of profit just wiped off in one day.

I don't think I'll do anymore averaging down and if i do, i better watch my size

You should quit trading. Really.

Averaging down in a sideways or bull market is kinda understandable. Averaging down now is pure stupidity.

1 day to wipe out a month's profit spells FAILURE for you. Seriously, quit while you have some equity left.

 

[R. Raskolnikov]

The OP doesnt understand CONTEXT, that is the key to everything.

Quote from Anaconda:

You should quit trading. Really.

Averaging down in a sideways or bull market is kinda understandable. Averaging down now is pure stupidity.

 

[lemeeeplay]

It took me blowing two accounts before I learned to never avg down again.

 

[TraderZones]

Quote from Cherrypicker:

You're not alone there. It's one of the mistakes I keep repeating every couple of months and it always leaves a dent in my balance. It never works, yet for some stupid reason I'll give it another go. It's a psychological flaw that's tough to beat.

maybe averaging down as a SCALPER. But trying to hold on in these kind of markets is suicidal.

 

[innovest_11]

Thanks for your advice, what i understand by Context from you is the direction it is going right? Meaning go with the trend and not against it?

Quote from R. Raskolnikov:

Average up/down works amazing when you understand CONTEXT. Meaning you know that price tends to overshoot but the real direction lies in waiting. If you don't understand the context, new lows (or highs) can just keep going and going and going......

 

[innovest_11]

Maybe i too unwilling to take a small loss, and got into trouble by adding size, and going against the trend, thanks for all advices given

 

[operator]

Quote from TraderZones:

maybe averaging down as a SCALPER. But trying to hold on in these kind of markets is suicidal.

It's suicidal for scalpers as well. It's a really dump practice, that's why I use stops on ALL of my orders....

 

[ChkitOut]

I think its just a simple case of understanding your system/method, if you have one.

For me, I know that when I enter a trade it "should" go in a favorable direction almost immediately. Therefore my stops are really tight. If it doesn't, I know my analysis was wrong (which happens all the time), so I simply exit.

I don't think you have a plan when you enter a trade. You probably are still in the "hope" phase.

A bad plan is better than no plan at all, trust me.

 

[ProfitTakgFool]

Exactly!

Quote from R. Raskolnikov:

Average up/down works amazing when you understand CONTEXT. Meaning you know that price tends to overshoot but the real direction lies in waiting. If you don't understand the context, new lows (or highs) can just keep going and going and going......

 

[Fractals 'R Us]

I worked out a whole trading scheme once that was very martingalesque, it [in backtest] was very profitable but it was definitely going to blow out an account at some point. The reason I never took it live was that if it made a lot of money before blowing out, fine, fund it again and run it some more, but if it blew out right at the get-go I could not afford to fund the account again.....