Can scaling/averaging down be a viable trading system?

Quote from Remiraz:

how do u know if a pullback is coming? what if that pullback never comes?
More...

This is very market specific... I am only talking about intraday trading ES which tends to swing back and forth... You have to be in tune with the tape and you might not necessarily scale in the full position all the time... all depends on price actions and time duration. Then again you don't know since there is no such thing as sure money. Like I said, it complicates things for me and I prefer to find better entry method and just get out.

I did some system testing and find the technique of advisory stop (waiting for better price to get out) combining with extreme mechanical stop does not necessarily perform better than just a wide stop.... but I think system trading is very different from discretionary trading since other human factors are more in play for discretionary trading.

Then again I remember testing something similar to Linda Raschke's Holy Grail on YM for the past 3 years... If you are trading with OPEN-ENDED risk by using advisory stop ALONE to get out when even (waiting indefintely). You will get some unrealistic straight up equity curve meaning EVENTUALLY the market swings back (at least for the past 3 years) but you don't know after how many hours or days and how big the paper loss. Interesting but useless study IMO... noone will be crazy AND stupid enough to trade like that.

Personally, I consider this great insight on part of my mentor but I found it can save me money four out of five days and then invite serious ego problem on the fifth day (lose focus)... This will make hell for someone taking marginal trades. I would suggest people to search hard for superior entry technique instead especially beginners like me.
 
Can anyone else explain Macro's strategy? ... because I've read and re-reread this thread (as well as some more pm'ed explanations) and I still don't get how one could be coming out ahead if on one side you're accumulating profits while on the other losses. What am I missing?

I don't want to take up more of Macro's time than I have already and maybe another person can offer a fresh perspective. So if someone could shed some light on this, I'd really appreciate it. Perhaps by using today's intraday data?

:)

Thanks guys.
 
Quote from Remiraz:

how do u know if a pullback is coming? what if that pullback never comes?
More...




A pullback will always come if you know when to enter.

Interesting to find this thread. Averaging down is my main strategy. I bagged 9600+ pips profit in the last 12 months through averaging. The trick is to know when to start. Wait for price to diverge 5% from the 200 sma and begin to go against the trend. Have a large account and patience. The further the price moves away from 200 sma the more you enter. Works wonders with a mini account and about 40k. Mean reversion is the only way to safely trade this way and it does works, make no mistake.



Kman
 
Quote from Kmanii2001:

A pullback will always come if you know when to enter.

Interesting to find this thread. Averaging down is my main strategy. I bagged 9600+ pips profit in the last 12 months through averaging. The trick is to know when to start. Wait for price to diverge 5% from the 200 sma and begin to go against the trend. Have a large account and patience. The further the price moves away from 200 sma the more you enter. Works wonders with a mini account and about 40k. Mean reversion is the only way to safely trade this way and it does works, make no mistake.
More...

which time frame u trade on? 5/15/30 mins charts?
 
i think if you find the right stocks this can be a viable option, take a look at canadian bank stocks for example i know someone who makes hundreds of thousands of dollars a year because he buys at 95% of the 52 week high and keeps averaging down, sells everything when it hits a 52 week high again if you look at a 70 year chart there has never been a time when they havent come back.
its just like buying the index if you are willing to hold through the pain you can average down all you want and never get hurt.
 
i really feel drawn to average down strategies all the time, because of the easy money, but i know it's not a good strategy in almost all cases. reason: ur biggest when you lose.

i don't like average up strategies either because it's hard work taking all those tiny losses lol

so, yeah.. life's a bitch and then you die and there's no easy solution :(
 
Quote from nononsense:

Can scaling/averaging down be a viable trading system?
Excellent approach for fellows having trouble with finding "the Trend".
More...

finding the trend isn't the problem and we all know it. using MAs even newcomers have a 100% chance of being in the trend with the right positions when the trend comes.

the only problem is how much we lost beforehand. :eek:
 
gdrew77,

Here is what you do.

Trade one contract now!

Enter ONLY when you can get in between support and resistance with a risk of 1 to a profit of 3 ratio. Wait for your set-ups, Keep a journal and write down the cycles and the times and begin your observations 1 hour before the RTH open. Write down what time it is when you can make an entry, whether you make it or not. Start comparing the days...discover the pattern. Pay attention to the days of the week. Be aware of the news calendar. gdrew77, you have graduated, now your work begins and treat everyday as the first day and you are starting from zero. Do not carry over any baggage!

Work on your Entries and "bracket in" that 1:3! No emotion. Now when your stop hits.... reverse! Pick an instrument like YM or ER..with some ranges and volatility.

Do this 3 times THEN YOUR DONE FOR THE DAY! Keep good stats and share them with us, here. (Don't worry this is just in the beginning, you will know what to do by WHAT your TRADES are telling you and what condition the market and you are trading in, to know which system to switch to after trade #3. yes you must learn to be like a chameleon)

Michael B.

P.S. 2 or 3-contract trading is a little different, but first master 1-contract trading. Then I will introduce you to what Break Even scaling is...which is much easier

P.P.S. If I were to get back to trading Futures, I would continue with this method explained above as it seems to work in chop and catches a trend and keeps you out of a bad day. But it takes a disciplined, experienced trader to handle his emotions and stick with the plan. He must also understand that making small profits consistently is where it is at! Increasing the contracts and how much of the trading day is traded, can be dealt with later. You need confidence and to be profitable FIRST before messin' with leverage.

P.P.P.S. Imagine this. You set down to the poker table with all your friends for Tuesday nights poker game and you brought your cigars. You play three hands and get up and go home for the evening...its only 8:00PM and Wifey has not even brought out the sandwiches!

P.P.P.S. Hint: The size of your bracket is determined by the range of the support and resistance, you are getting into the middle of. Now I cannot say more or I will be giving away some proprietary stuff of mine that I built manually over hours of spreadsheet labor.
 
Hi,

I'm just starting to read about Strategy trading and it looks the way to go...

I'd be very thankful if you guys tell me where I should go from here. I was thinking of getting the Trading Blox (looks simple/easy enough for me), get a strategy that fits my style (not sure where to look for that) and start using it.

ElecticSavant,

what you described above sounds interesting and simple to a person like me. Can it be automated eventually... I was just getting into it and the thread stopped.

Thanks a lot for the suggestions!
 
You must log in or register to reply here.
Back
Top