Conviction and averaging down
- Thread starter DayTraderNYC
- Start date
I seem to be really good at throwing in the towel and selling the low print on the chart. I have done better lately by being a little more patient. Just about the time I think I can't take any more bleeding is also the time that buyers seem to step in. I am not advising that people hang on to loosing positions but I too am doing a little bottom fishing here and bleeding a bit. On Tues. I doubled up on all my long positions by buying call options when they were cheap. I put limit orders to sell all my stock at a higher price and got lucky and sold most at or near the high. I feel a little safer with the call options because the delta is a little easier on you when stock is falling and gets higher when the stock is rising. Also good protection in case of major event. Of coarse I had to go into 03 to avoid the time decay but it would be foolish to think this market will turn tomorrow. I am a day trader so holding any thing is really hard for me to do. Good luck to all us investing fools 
Nas
NasRather than using averaging down to repair a trade that is moving against you, look at the market and see if another position in the same security on the same side of the market is warranted. Sometimes prices are stumbling around as the specialist plays his games, but the direction is technically obvious and will unfold shortly.
If another position can't be justified independently of what you already own, accept the fact the market is telling you that you are wrong and either just exit, or, if conditions merits, double to the other side of market to put yourself back with the trend.
It's not the unrealized money loss that's aggravating, but being out of synch and on the sidelines until the problem can be fixed. Better to take the loss, clear your head, and get back in the game.
Charlie
If another position can't be justified independently of what you already own, accept the fact the market is telling you that you are wrong and either just exit, or, if conditions merits, double to the other side of market to put yourself back with the trend.
It's not the unrealized money loss that's aggravating, but being out of synch and on the sidelines until the problem can be fixed. Better to take the loss, clear your head, and get back in the game.
Charlie
Heed the advice below.
Write your trading rules out and live by them. It will save you a lot of pain and lost money.
Carol
Write your trading rules out and live by them. It will save you a lot of pain and lost money.
Carolwhen it comes to the markets, they both amount to the same thing. in my opinion.... (or, wait a sec, i'm convinced that's the case
)daytrader, imo, with some types of trades there can be a point where you feel the stock might adversely move, but rather than waiting for it to move there, you enter early because you don't wanna miss the move. in those cases it MIGHT (although i don't do it) make good sense to add to your position, and that way still participate if the stock does make the move you expected.
also, if the market is going in the direction of your conviction, but your stock just made an adverse move, i guess you could feel justified in adding more at that point (again, i don't do this).
you're right that sometimes in adding more and the stock finally makes its move, it can really pay off (i started trading like this, most of it paid off and i thought i was a genius), but i've found that the times it doesn't can absolutely kill you. also, by staying in with bigger size than you normally handle, i think there's a tendency to just sit there hoping, rather than trading on objective analysis of the moment. i've found that when i done this, i'd often look back and realise what a fantastic oppurtunity i missed in the opposite direction, all because of this conviction of mine that the stock HAD to do X.
Daytrader,
A fellow trader asks you to lend him some money so that he can add to a losing position,,,,,,,,,,,,,what you going to do?
You got shit for brains if you say yes.
Good trading !!
A fellow trader asks you to lend him some money so that he can add to a losing position,,,,,,,,,,,,,what you going to do?
You got shit for brains if you say yes.
Good trading !!
I always average down and then average again. Just make sure that your basis is ok. Make sure you scale well. Make sure you're right. you'll do just fine.