Can scaling/averaging down be a viable trading system?

Quote from duard:

Have you considered scaling in WITH the trend. That is only adding as profits accumulate?
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Yes, with preplanned money management %.

Actually averaging works real well with mutual funds, they know thier stocks;
but MAINLY get paid on gross assets[hundreds millions,billions,] not profits.

Several entrys on a stock you know, works on occasional pullbacks;
but wouldnt call that averaging down.Preplanned stop also.:cool:
 
Quote from dwl603:

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.
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Do you have any idea what his average return per annum is? He has to allocate a large sum for averaging down. If the bank stock only has shallow retracements, he will make money but only on a small position. If he decides to average down on more frequent and tighter basis, he needs large capital. So, I think it works but depends on what kind of returns you are looking for and the capital you have to commit.
 
The Wealth-Lab website has lots and LOTS of very profitable systems that average down. One example is "Oscillator Pullback" whose source code (in WL) is available free here.

I've attached a table of the performance of some of these systems. You'll note that Oscillator Pullback is ranked number 5; perhaps it may amuse you to glance at the code for numbers 1 through 4.
 

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Cool!!!

Quote from horribilicus:

The Wealth-Lab website has lots and LOTS of very profitable systems that average down. One example is "Oscillator Pullback" whose source code (in WL) is available free here.

I've attached a table of the performance of some of these systems. You'll note that Oscillator Pullback is ranked number 5; perhaps it may amuse you to glance at the code for numbers 1 through 4.
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i tried an intraday average down method on FX once for a couple of weeks, thank goodness it was on Demo. :D

the risk:reward ratio is just off the charts. its like 1000:1 risk reward. plain crazy. :eek:
 
I never think about risk vs. reward when I trade. I use wide discretionary stops. If my setup is there I’ll take it. If it goes against me and I see an opportunity to average down or up (according to my plan) I’ll take it. However, the skilled trader knows when to reverse at a certain price level.


Quote from Remiraz:

i tried an intraday average down method on FX once for a couple of weeks, thank goodness it was on Demo. :D

the risk:reward ratio is just off the charts. its like 1000:1 risk reward. plain crazy. :eek:
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