Buying on the way down, selling on the way up
- Thread starter Matt8200
- Start date
Yes, with emini contracts I scale in as it moves away from my price target, lowering/raising avg. cost basis. But like Bowgett says, I am prepared if it goes against me.
With this particular method, I am looking for small moves, and it ends up being a high probability win rate. However, when a trade goes against me, it is often more than a few single gains. It just happens at a low enough percentage rate to make the system work for me.
I agree with Bowgett though, got to be careful doing this. I go no where near what could be potentially very dangerous position size wise. Just little base hits, trying to get a lot of them.
With this particular method, I am looking for small moves, and it ends up being a high probability win rate. However, when a trade goes against me, it is often more than a few single gains. It just happens at a low enough percentage rate to make the system work for me.
I agree with Bowgett though, got to be careful doing this. I go no where near what could be potentially very dangerous position size wise. Just little base hits, trying to get a lot of them.
Certainly.
You make the most money that way.
As will all methods, you only have to know when.
Hope this helps
nononsense
If market conditions stayed the same for more than one day in a row, I'd be rich by now. One day I can make a mint buying breakouts up or down, the next day they are all false and I have to change my strategy or get burned. You just have to be flexible enough to adapt quickly.
Buying on the way down is a great strategy if the stock is nearing some long term support point that will bring in other buying interest. Selling on the way up, at least in a bull market, is way too dangerous. The same for buying on the way down in a bear market.
===========
Yes, strong stock , in a strong sector, have bought before complete confirmation ,near a 50 day moving avereage.
Its more risky/rewarding, dont do it as much, another reason a strong stock will spend much time above/not near 50ma.
In another big/long term sense if you buy on a pullback/down ;
or ever sell to close a position in a bull market, you have sold on the way up
In physical commodities this is called "Scale Trading" and is quite popular. The gurus of the approach are Wiest (link to book1), Namrevo (link to book2), and McCafferty (link to book3).