Instead of averaging down, I prefer to take the loss and rather re-enter. If, I'm proven right on that second entry, I'll see if I can add more contracts as price moves my way, i.e., averaging up.
This ensures that full stop-outs are always taken on small size and you get the occasional big winner on larger size.
Averaging down on the long side worked when the FED was juicing the markets and interest rates were zero. Different conditions these days with the market routinely moving 100 points in 24 hours.
Speaking of the FED. Fundamentally, what changed yesterday that should fuel a rally? Rates were raised, yes? What else?
This ensures that full stop-outs are always taken on small size and you get the occasional big winner on larger size.
Averaging down on the long side worked when the FED was juicing the markets and interest rates were zero. Different conditions these days with the market routinely moving 100 points in 24 hours.
Speaking of the FED. Fundamentally, what changed yesterday that should fuel a rally? Rates were raised, yes? What else?
