Improving your average price by increasing your risk is not a good deal in my book.
averaging down and pyramiding; a problem which i can't figure out....
- Thread starter TGpop
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Improving your average price by increasing your risk is not a good deal in my book.
Averaging down is the right way to trade. It only doesnt work when your trading plan didnt work in the first place.
I can walk on a sidewalk and never ever really think about falling off
but if that sidewalk is a thousand feet in the air with nothing but a dropoff, falling off is all I would ever be thinking about
so the idea about averaging is, now that you made it to the store on the sidewalk, how bout trying the short cut which is only ten feet off the ground
and then the shortercut which is only 100 feet off the ground
etc
but if that sidewalk is a thousand feet in the air with nothing but a dropoff, falling off is all I would ever be thinking about
so the idea about averaging is, now that you made it to the store on the sidewalk, how bout trying the short cut which is only ten feet off the ground
and then the shortercut which is only 100 feet off the ground
etc
Perhaps all in all out is the best way to do it.
The problem with averaging down is that you take your losses on maximum size and your wins on minimum size.
I know that there are many people who probably do well with averaging down, but I`m sure they also take many large hits that eat into their bottom line once in a while.
I typically go all in and all out, but occassionally I prefer to add more units at my original price or better as I`m proven right on the trade and then start reducing risk as the trade moves in my favour.
Many ways to skin a cat.
I know that there are many people who probably do well with averaging down, but I`m sure they also take many large hits that eat into their bottom line once in a while.
I typically go all in and all out, but occassionally I prefer to add more units at my original price or better as I`m proven right on the trade and then start reducing risk as the trade moves in my favour.
Many ways to skin a cat.
That's not necessarily true.
What if took major heat on a trade that you kept adding and then you ran it all the way home?
that's why, unless you have a better idea, if you are going to average down, you must certainly also average up, or it will be just as you say, big loss on big size.Quote from Laissez Faire:
The problem with averaging down is that you take your losses on maximum size and your wins on minimum size.
I know that there are many people who probably do well with averaging down, but I`m sure they also take many large hits that eat into their bottom line once in a while.
I typically go all in and all out, but occassionally I prefer to add more units at my original price or better as I`m proven right on the trade and then start reducing risk as the trade moves in my favour.
Many ways to skin a cat.
the funny thing is, I have found only averaging up does not tip the scale in any way in my favor. As a matter of fact it hurts.
So, IMHO, if you are going to do one, then you need to do the other.
it's perplexing why it seems to work.