Does anyone else Test your trading ideas with Small size?

[murray t turtle]

When I buy gasoline, or groceries, or stock up on toilet papers and hand sanitizers, I don't scale in, I average down.

It is an interesting paradox, when we buy things other than stocks, we are usually very happy to see prices go down and we buy more when that happen. Yet we are told never average down when trading?

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OK
Depends on what we are trading; averaging down on DAL...………. since its been bankrupt once + that was not virus related/so that could be deadly.
A strong trender like QQQ; many ways to make a profit off that...………………………………………………………………..

 

[ironchef]

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OK
Depends on what we are trading; averaging down on DAL...………. since its been bankrupt once + that was not virus related/so that could be deadly.
A strong trender like QQQ; many ways to make a profit off that...………………………………………………………………..

Yes sir, I won't average down on DAL or GE (again ) for that matter. But average down on QQQ maybe smart? Like doing DCA. Not a prediction.

I was just questioning the wisdom of making blanket statement using words like "never".

 

[ironchef]

I typically test using just 20 or 30 shares at a time, then scale. Any thoughts?

Scale meant average up and not average down?

I had a side conversation with @murray t turtle, one of my mentors, on the subject of average up/down so just want to clarify your statement.

Thank you.

PS: To answer your question, I don't usually scale, I normally bet a fixed size based on Kelly. Do all my analysis and backtest, if encouraging, I bet. Often, if I add to my position I average down and not up, like this last March, kept buying xxx, yyy, zzz... on their way down. I only trade options so what I do may not be relevant to your question.

 

[murray t turtle]

Yes sir, I won't average down on DAL or GE (again ) for that matter. But average down on QQQ maybe smart? Like doing DCA. Not a prediction.

I was just questioning the wisdom of making blanket statement using words like "never".

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QQQ tends to trend so well;
could profit both ways/with reasonable size. Having said that, exspect more roller/ coaster this summer. DOW ran up so much yesterday it may have stalled /LOL??...............................................................