Averaging Down the real Holy Grail

[austinp]

<i>It irks me that some traders here can be so dense. Tell me, what happens when I buy three support levels and dump them all at new highs or some major resistance point.</i>

We know what happens then. Now tell us how you handle all the other situations in between that I detailed. Give us your complete gameplan for them.

<i>Look at the charts, you see vertical price movements all the time making new significant trend changes every darn week?</i>
Now we do... look at charts from history and tell us how you handled that then. A career is made thru all market behavior, not just Fed-induced upward bleed

<i>Accept the fact that the taboo notion of averaging down is so far up your ass, probably due to lack of discipline or someone stepping forward to tell it like it should be done (like me) that you just cant see past that.</i>

Where is your detailed explanation of how you make it work? Where are some examples via trade blotters of how it all happens?

You've typed in a lot of hot air so far, that's about it. How about detailing your HG management approach thru the specific scenarios I laid out in detail earlier? Stop telling everyone how it should be done, and start explaining - showing it.

Simple as that, right?

 

[saxon22]

So far guys,alot of people are talking but only MBG has presented real figures. So far he is up 100% and that is after 3 huge days going to the toilet. How is that not a winning scenario is beyond me. I am sure his way of trading is not what other reputable traders here are doing, but he did go from 150K to 475K in less than 4 months. Weak trading - I do not know.

 

[austinp]

<i>"Weak trading - I do not know."</i>

You forgot the rest of the story. MBA is up 100% because of insane volatility, and then he quit while ahead before losing it all. Did you read that part of his message? Did you read where he said he quit that tactic forever before his 2007 annual gains drop to zero or below?

Did you hear = heed where he said do not average down?

Dream on if you wish, I've spent more than my share of time in this thread. The market itself will teach everyone their own lesson about averaging down. Have at it, and enjoy the results in the end.

 

[iluv2trade]

Quote from austinp:
...
Simple as that, right? [/B]

He's laid out the basics of his proprietary strategy - something very few people do. You should be thanking him instead of insulting and obnoxiously asking for more details...

 

[saxon22]

Quote from austinp:

<i>"Weak trading - I do not know."</i>

You forgot the rest of the story. MBA is up 100% because of insane volatility, and then he quit while ahead before losing it all. Did you read that part of his message? Did you read where he said he quit that tactic forever before his 2007 annual gains drop to zero or below?

Did you hear = heed where he said do not average down?

Dream on if you wish, I've spent more than my share of time in this thread. The market itself will teach everyone their own lesson about averaging down. Have at it, and enjoy the results in the end.

Austin, I hear you and appreciate that you are using your time to spread the knowledge. I do not know if MBG will try something new, or just fine tune his strategy. Time will tell.
As for averaging down - it seems very attractive and that allure is hard to squash. I tell you,every day I have to keep myself on the mental leash and fight the desire to go back and give it one more try.

As for now I am recovering averager downer. I can only hope that your medicine is good enough to keep me off the wagon. Anyway, good luck on Monday, may the market power be with you.

 

[Avgdownking]

Here is the "horror" of averaging down with the trend at support levels until the predominant trend absolutely changes.
It's not the best, but it's the best I can do.
I think we can't attribute it to recent volatility because I'm including half a decade.

ADK

 

[smilingsynic]

Quote from Avgdownking:

It irks me that some traders here can be so dense. Tell me, what happens when I buy three support levels and dump them all at new highs or some major resistance point.

My alleged density is overwhelmed by your obvious naivete.

The allure of averaging down is that most of the time, profits will be made. The same can be said of the option equivalent of averaging down--short gamma, unhedged.

It is a grave mistake to confuse win percentage with profits. Weak traders are suckered into false security because they have been so right so often.

How does one KNOW that new highs will be there soon enough so that the positions you have collected can be "dumped"? Unless you're Marvin the Mindreader, there is no way of knowing what is around the corner for sure.

How long did it take the S&P to make new highs after 2000? Years. The Nasdaq is not even close to making a new all-time high.

I traded throughout most of the 90's and all of this decade. I can assure you that averaging down and waiting for new highs, or even new intermediate highs, is NOT the way to make AND KEEP money.

But, please, go right ahead.

 

[smilingsynic]

Quote from Avgdownking:

Here is the "horror" of averaging down with the trend at support levels until the predominant trend absolutely changes.
It's not the best, but it's the best I can do.
I think we can't attribute it to recent volatility because I'm including half a decade.

ADK

LOL--a chart? We need much more than that!

You need to define your terms. What do you mean by "support levels" and "predominant trend", for instance? On what time frame? Which instruments? How long a holding period?

 

[austinp]

<i>"He's laid out the basics of his proprietary strategy - something very few people do. You should be thanking him instead of insulting and obnoxiously asking for more details..."</i>

The basics of his proprietary strategy laid out? They are? In here?

Please forgive my obvious ignorance. Could you please cut & paste that detailed strategy which covers all market scenarios, including periods of persistent sideways price action?

I'm truly sorry, I do not see any detailed strategy on how all market conditions are handled. My bad. If you would be so kind as to assemble those details in one post, we'd be eternally grateful.

 

[Aisone]

Averaging down will make a good trading system into an excellent one, and a bad trading system into a horrific disaster.

That said, averaging down has always been the backbone of my profits. If the timing of my first trade is wrong, but I'm still confident on the value, I'll buy 1.5x the first trade at a lower price, and if that's still off, I might buy 1.5x the first trade again at an even lower price, making a position 4x the original investment. (I used to do 1x, 1.5x, 2.5x during the psychotic .com volatility)

Simply doubling a position helps but in theory statistically, if it is a good value at the first price, its a great value at the lower price and should receive a larger bet and so on. (all else being equal that is)

The trader has to have a good system tho, a lot of mental stamina and trading maturity, a good science of what price or level to increase the original position, and a strong idea of when to say uncle (not to mention having a keen sense of frontrunning/unusual trading activity doesn't hurt.)

The one year that I didn't profit (2002), I cautiously used stops after the first opening position instead of taking more risk, and that almost put me out of business.