Averaging Down the real Holy Grail

The Holy Grail still at its prime.

Two positions placed on Friday, I only go long at support areas, and a third during AH Sunday-Monday.

Fourth and fifth ones were ready but not required as we got nowhere around that area.

Judging by today's action plus Fed's upcoming Halloween pump I expect to sell at my target resistance before the meeting for some handsome profits.

Based on the calculated risk a loss on a full 5 position scale in would have resulted in erasing 2.3 weeks of profits.

ADK alive, kicking and making money
 
A daily chart, common sense (buy low sell high) and some balls is all you really need.

Discipline of course but if you are expecting a good layout of my hard work don't hold your breath because I really don't see the point.

I've given you the basics now pull out that calculator and start crunching numbers.

After all, it is a numbers game, always.

ADK
 
There are many variations of averaging down. It allure lies in it simplicity to follow. Example: Look for the first dip on a 5 min chart. Once it appears to come to an end you buy 1/10 of your intended size for argument sake 1 contract. Then if it goes your way you ride it for whatever it gives you with a stop of 1 or 2 points. If the market continue to go against you, then you wait for the next reversal and double the original position which would be adding 2 in this scenario. Then if it continues going against you, you double the last position. So now you have 1+2 + 6 contracts. Then if continues going against you have a predetermined amount you are prepared to let go Let say (2K), and once it gets there you dump th trade and call it a day. Of course, do not USE IT when the market is dropping down like mad (Friday comes to mind), and you might want to stretch the intervals of buying to make less but safer. For example I used to do it every 5 to 7 points on the ES. Does it work???? I averaged 1K a day easy on my small account. Big account: 5K BEFORE noon around once a week (playing the same system with 10 contracts per order). However a coupleof times I was in deep shit with an overnight position of -8K. Of course sleepless night would ensue and 2 packs of cigs would be smoked on a fine night like those. My normal blood pressure would go to 190 over 130 and I would have difficulty breathing.


To make a long story short.... I chose life. However, if you have nerves of steel and nobody to cry on your funeral then give it a try.
 
Saxon22,

Difference is, I don't let intraday noise get in my way. As I only buy major support or short major resistance.

Usually about 1 trade a day.

Sometimes 2 depending on the chaos.

ADK
 
Quote from Avgdownking:

Saxon22,

Difference is, I don't let intraday noise get in my way. As I only buy major support or short major resistance.

Usually about 1 trade a day.

Sometimes 2 depending on the chaos.

ADK
More...

"Major resistance" and "major support" EVERY DAY? It mustn't be that major! :-)

I have presented three well-reasoned objections to your contention that averaging down is some kind of "holy grail". That you have not really addressed these suggests that you are unable to do so.

I'll add one, and make it four:

Anyone who trades can testify that the stronger the trend, the weaker the pullback, and the tighter the channel.

Averaging down makes sense only if there is a profitable place at which to exit, but in strong trends, there tend to be few, if any such places. It makes much more sense in that kind of environment to short the pops in a downtrend, and buy dips in an uptrend.

And if one has make a mistake, to correct it.

It takes only one strong trend to end the many gains from averaging down.

Buying support and selling resistance can work, if one uses nimble targets and reasonable stops. But in a red hot trend, support acts like butter, and resistance isn't much of a ceiling.
 
I hear you loud and clear. You could buy HOD or LOD and probably make $$$ long term. However, for that you need to have major $$$$. To keep 10 contracts overnight you need around 40K in the account to begin with. Like I said if you can do it, more power to you. I almost died as a result of it.
 
Quote from smilingsynic:

"Major resistance" and "major support" EVERY DAY? It mustn't be that major! :-)
More...

You are assuming the daily trade is the beginning of a new trade when in fact it can be that or

- Selling at target
- Covering at target
- Scaling in

ADK
 
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