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I would like to discuss averaging down
- Thread starter Daring
- Start date
Quote from oldtime:
If I was God I wouldn't need to average in. I could just simply buy at the bottom. If you don't believe me, just ask him. He was the one who revived this thread and insisted we all needed to be saved.
Despite the repeated sarcasm that continues to flow from you like a raging niagra.. this time- I must admit -- this was good and made for a good laugh!
Quote from oldtime:
let's say you are a bull.
you get long and get stopped out
then what? look for a better place to get long? You just got stopped out at a better place to get long.
If I get stopped out and allow it to move down one more tick and put it back on with a stop would that make you happy? Because then I am not technically averaging down.
you were correct the first time. Size is everything. How much to start with? How big to get to?
Usually, the same guys that can't understand averaging also can't understand size.
Well, you obviously need to enter at strategic levels and not in the middle of nowhere while using a meaningful stop that is outside noise, such that if it`s hit, you were actually wrong, and price will typically drop even more.
Then you re-enter after price drops if you still remain a bull (many scenarios can unfold and the picture is always changing), instead of averaging down to the next level, from where you need a significant favourable excursion just to break even. And that is ignoring the risk you`re piling on as price drops.
Of course, an alternative would be to not average down and wait until price rises to add the next unit. But that`s not very smart either, since you miss a potentially nice move.
Quote from oldtime:
You just got stopped out at a better place to get long.
Usually, the same guys that can't understand averaging also can't understand size.
No you didn't oldtime. When strong levels get breached... they typically gravitate to the next level.. far below or above your stop point. You should be on the other side of the trade-- not diddling in the middle as price continued to go to the next level. The first stop loss is always the cheapest. Now-- if one does not know where to properly place a stop- of course-- you could be getting out where you should be buying - in an area of demand! You gotta know where supply/demand exists... but u dont need absolutes by any means.
Size and controlling risk are the two most important aspects of my trading plan... controlling losses first and foremost. Sticking to the highest probability/highest profit potential/lowest risk levels for entries --profits easily take care of themselves.
Humor me oldtime:
You've got a 1R of $ 1500.
You're an intraday trader... flat end of day.
You prefer to take trades that offer a minimum of 1:2 risk/reward.
You want to short GOOG and average down when it breaks 728.
Price is currently weak for most of day- then exhibits relative strength and it becomes obvious that a breakout is going to happen.
How would you handle it?
Quote from oldtime:
sometimes, especially for day traders who average in it is called the shotgun approach.
Insisting that avereraging is not neccessary is like claiming you are better than even Annie Oakly and can go duck hunting with a .22.
Lol your absurd hyperbole is the best part about your posts oldtime.
I wouldn't do it that way. Especially flat by any date or time certain. I have all eternity to let it play out.Quote from riffrafffpatrol:
No you didn't oldtime. When strong levels get breached... they typically gravitate to the next level.. far below or above your stop point. You should be on the other side of the trade-- not diddling in the middle as price continued to go to the next level. The first stop loss is always the cheapest. Now-- if one does not know where to properly place a stop- of course-- you could be getting out where you should be buying - in an area of demand! You gotta know where supply/demand exists... but u dont need absolutes by any means.
Size and controlling risk are the two most important aspects of my trading plan... controlling losses first and foremost. Sticking to the highest probability/highest profit potential/lowest risk levels for entries --profits easily take care of themselves.
Humor me oldtime:
You've got a 1R of $ 1500.
You're an intraday trader... flat end of day.
I prefer to take trades that offer a minimum of 1:2 risk/reward.
You want to short GOOG and average down when it breaks 728.
Price is currently weak for most of day- then exhibits relative strength and it becomes obvious that a breakout is going to happen.
How would you handle it?
I have no risk reward ratio except in historical analysis.
I wouldn't short anything unless I also had somehing on long that was correlated.
and even one pair isn't enough for me.
Quote from Laissez Faire:
Well, you obviously need to enter at strategic levels and not in the middle of nowhere while using a meaningful stop that is outside noise, such that if it`s hit, you were actually wrong, and price will typically drop even more.
Then you re-enter after price drops if you still remain a bull (many scenarios can unfold and the picture is always changing), instead of averaging down to the next level, from where you need a significant favourable excursion just to break even. And that is ignoring the risk you`re piling on as price drops.
Of course, an alternative would be to not average down and wait until price rises to add the next unit. But that`s not very smart either, since you miss a potentially nice move.
Well put posts sir!
He's gone already? shucks, I was just starting to get used to him. Must admit, it was a rough transitioning for me going from Captain Kangaroo. I'll be glad when things finally stop changing.Quote from riffrafffpatrol:
No no noooooo oldtime...
In your case that happened whem Mr Rogers left the air...