Even the best lose sometimes.

[Handle123]

Life is a RISK, we make decisions everyday just in our own lives, should I make a left turn, is the milk spoiled, will the old bridge hold up traffic going across. And as traders, can't sit on the sidelines and expect to make returns if you don't risk. If you not having losses, you not trading enough.

I average down on every trade taken, am always early, systems have been well tested based on at each level and different price climate with sample sizes over 20k. I NEVER recommend anyone to average down as they seldom prepared and generally have not the emotional terror ability to sleep at night when there are full losses. Largest losses happen when averaging down, remember in past would take months to get back to even, do anything long enough like decades, you bound to get good at it.

 

[ironchef]

Actually I was being facetious, but I should made it more obvious than I thought I did.

Not to worry, we reach our own conclusion and get our own insights from each post no matter the intend of the author. That is why often a bad teacher/coach can produce great students.

If you study BMY or ABBV you will understand what I said, or maybe you won't. Entirely up to you.

 

[SunTrader]

Not to worry, we reach our own conclusion and get our own insights from each post no matter the intend of the author. That is why often a bad teacher/coach can produce great students.

If you study BMY or ABBV you will understand what I said, or maybe you won't. Entirely up to you.

I understand. Just that some of the daytraders I've known personally - who have used averaging down in their trades - are former daytraders. Note once more this was daytraders.

Also I haven't swing traded a stock, other than a few times for family members, in at least 15 years so BMY or ABBV are just alphabet soup to me. But can't say it would mean anything much to me, strategy-wise, if I did trade them. (??) In a bull market just about anything works.

 

[ironchef]

I understand. Just that some of the daytraders I've known personally - who have used averaging down in their trades - are former daytraders. Note once more this was daytraders.

Also I haven't swing traded a stock, other than a few times for family members, in at least 15 years so BMY or ABBV are just alphabet soup to me. But can't say it would mean anything much to me, strategy-wise, if I did trade them. (??) In a bull market just about anything works.

There is a world of difference between average down day trades and short term trades vs longer term or B&H. I used to be puzzled by the advice of never average down because my own experience didn't support it. Now I appreciate it.

In investing and long term trading, you are trying to buy at a bargain price. You do your research, convinced it is cheap and buy. Then the price drops. If your assumption is still valid, you should buy more as it is now a better buy! I was stopped out of my FB @ $20 (bought at @23), AAPL @ $450 (bought @$480 prior to 7:1 split). Now I don't put a stop loss on my long term trades/holdings and when there is a dip I buy more (bought BMY @ $50, then @ $43 when dipped, ABBV @ $70 then @ $63 when dipped).

In short term trade, it is not the case, you don't care about fundamental value or whether it is cheap, all you care is if there are people willing to buy it at a higher price and if so you get rid of your goods. So, when price drops, it is not cheaper but maybe no one wants it any more. Averaging down is a bad idea. On my short term option trades, I have stop losses on everyone.

 

[Nobert]

Now I don't put a stop loss on my long term trades/holdings and when there is a dip I buy more

This

 

[SunTrader]

There is a world of difference between average down day trades and short term trades vs longer term or B&H. I used to be puzzled by the advice of never average down because my own experience didn't support it. Now I appreciate it...

I can't speak from experience but if I did swing trade longer than say a few days my preference would still be, not to average down. Up, yes because it confirms what I believed might happen. A trade going against me is always taken as a sign I was wrong and to step aside and wait for a better entry spot.

But you make it work the way you do it so who am I to say it can't be done and don't do it.

 

[ironchef]

I can't speak from experience but if I did swing trade longer than say a few days my preference would still be, not to average down. Up, yes because it confirms what I believed might happen. A trade going against me is always taken as a sign I was wrong and to step aside and wait for a better entry spot.

But you make it work the way you do it so who am I to say it can't be done and don't do it.

Yes, I combined long term B&H and swing options. I stopped average down on my option trades a while ago after researching this topic on ET.

I wish I know how to day trade options.