Can Market Makers (bots) see your stop in ES/MES?

[ondafringe]

In other words you are not only not respecting your initial stop, but you are also adding to a position that it is obviously not going your way.

Why don't you close your losing position first, and re-enter later if and only if the price returns to your original entry point?

If he originally saw the possibility of a 6 point gain, was stopped out with a 3 point loss, and waited to reenter at his original price, 3 points of the gain would be lost to cover the original stop loss. And the R:R would drop from 1:2 down to 1:1.

Averaging down allows him to recover the old stop loss on the way back up and double the potential point gain now that he has double the contracts -- assuming he is correct in the first attempt. Okay, maybe two attempts. Or something like that...

It's similar to scale trading.

 

[volpri]

Wish I had the guts to do what you do. Because one wrong average-down move at the wrong time can wipe a large account.

Not if a trader has his SL’s set

 

[Tradex]

assuming he is correct in the first attempt

And what if the second stop is also hit, 12 points below the initial entry price?
Now the trader is sitting on a 21 point loss, versus 3 points in the first scenario (no averaging down).

That's 7 times the initial stop!

Ouch!

 

[volpri]

Throw out everything in books or in so called "Conventional Wisdom" in trading out of the window.

You can do whatever you want (Average down, Average up, double down, etc...) as long as you will still be breathing, alive & well after you realize you are wrong.

 

[volpri]

In other words you are not only not respecting your initial stop, but you are also adding to a position that it is obviously not going your way.

Why don't you close your losing position first, and re-enter later if and only if the price returns to your original entry point?

Did you backtest that second option (no averaging down and possible re-entry later)?

Don’t need to backtest it. It is a losing strategy. Creates multiple consecutive losses.

By averaging down I am exiting, with profit, near my original entry along with high win rate. If strong comeback even more.

 

[volpri]

And what if the second stop is also hit, 12 points below the initial entry price?
Now the trader is sitting on a 21 point loss, versus 3 points in the first scenario (no averaging down).

That's 7 times the initial stop!

Ouch!

In theory maybe. In real trading it doesn’t work that way.

 

[Tradex]

By averaging down I am exiting, with profit, near my original entry along with high win rate.

You mean you are also buying (or shorting) more contracts, when you average down (1, 2, 4, 8, 16, etc...)?

 

[volpri]

You bet.

A couple of limit down moves for instance and Houston we have a ....BIG problem!

BECAUSE YOU DIDN’T HAVE A GIVE UP POINT SET!

 

[Tradex]

In theory maybe. In real trading it doesn’t work that way.

My dear Volpri, I have seen fellow traders lose 20 or 30 times their original stop while using these seemingly harmless averaging down techniques.

 

[Tradex]

BECAUSE YOU DIDN’T HAVE A GIVE UP POINT SET!

With limit down (or up) moves, the market would never give you a chance to bail out at the price you wanted.

And next thing you know, you have margin calls coming on all sides.