I would like to discuss averaging down

[oraclewizard77]

You need to create data which you can mine for statistical significance. For example, create an actual excel file where you have actual (but they can be in a sim account at first) entries where you choose to average into a trade or not. You can then calculate your actual win% and also see if you are making profit over time you keep the log.

This is also what is silly about these TA work or don't work threads. All one needs to do is 1st learn TA, and then create an Excel file using the entries over time to prove if you have a working edge.

Quote from Daring:

I started this discussion with a dilemma, one that has yet to be discussed.

Using entries with a fixed stop and no averaging might result in multiple small losses, these small losses could accumulate to become, large losses, similar to losses found in averaging down with a fixed max risk.

Using entries with dollar cost averaging might result in being right with small size or wrong with maximum size.

 

[ammo]

Quote from Daring:

Ammo,

Some would argue that if you learn to read the market well enough the need to average down goes away, so exactly what's your definition of "learn to read the market?"

if you can narrow it down to up or down and then a near and not so near and distant target,you can follow it and see how it tests each target,i don't trade stocks so i cant comment any thing worthwhile there but in stock indexes you can watch the uvol/dvol and adv/dec sort of like the nfl reference,are they in chop,are they breaking in one direction,on a trend day one is flat while the other continues to grow thruout the day,if so,how quickly,and up or down ,where will the nex supp or res be,and just follow it to those spots,a daytrader is looking for a quick return,a swing trader ocassional profits,if you are in a position for an extended time there are plenty of opportunities to improve your price thru averaging,while waiting for that eventual distant target

 

[jack hershey]

Quote from Daring:

I started this discussion with a dilemma, one that has yet to be discussed.

Using entries with a fixed stop and no averaging might result in multiple small losses, these small losses could accumulate to become, large losses, similar to losses found in averaging down with a fixed max risk.

Using entries with dollar cost averaging might result in being right with small size or wrong with maximum size.

to end your possible suspence:

You didn't begin the thread with a dilemma.

You do think the way you do. No one debates you on how you think we empathize and no more.

Some of the great tring minds have written about each part you string together into your personal web. If you had read WJO"N, you might not be stuck at the beginner level for life.

Reading now will not help you since your mind has formed a long term memory that cannot be erased and you will not do the work to get the alternative to erasing in place.

All you will do is continue to learn failure.

 

[Daring]

Quote from jack hershey:

to end your possible suspence:

You didn't begin the thread with a dilemma.

You do think the way you do. No one debates you on how you think we empathize and no more.

Some of the great tring minds have written about each part you string together into your personal web. If you had read WJO"N, you might not be stuck at the beginner level for life.

Reading now will not help you since your mind has formed a long term memory that cannot be erased and you will not do the work to get the alternative to erasing in place.

All you will do is continue to learn failure.

Please abstain yourself from my thread discussion, thank you.

 

[oraclewizard77]

What he said was very important, and you choose not to listen. If you have learned bad habits say from snake oil salesmen that teach the wrong way to manage risk vs reward, you need to reprogram yourself. If you are not able to evolve to the next level of self awareness, you will not be able to succeed in trading.

Averaging down or not averaging down is not important.

Its because price movement is only in your mind.

Do not try to bend the spoon — that's impossible. Instead, only try to realize the truth: there is no spoon.

Quote from Daring:

Please abstain yourself from my thread discussion, thank you.

 

[RedTankEra]

There's nothing wrong with averaging down, provided the instrument you trading for is in a proper state for averaging down.

AVERAGING DOWN and GOOD risk management can CO-EXIST peacefully you just must learn how.

Most trading textbooks blow, think different, just carefully.

At the same time he has been given advice from good traders that admitted to using such position management techniques like Dustin and Ammo.

In fact, admitting that without it, they probably would not succeed.

People claim averaging down is dangerous, guess what, so is trading, unless trading a paper account or very small cash amounts.

I very rare average down, but there are times, the market forces me to adapt to it.

The best traders are adaptable and with an open mind, which is far from what posters in here like Hershey exhibit.

Daring, keep digging, don't let people without a clue, interfere.

If you want help, send me a PM, I would be willing to give you a starting hand.

 

[ammo]

Quote from Daring:

Ammo,

Some would argue that if you learn to read the market well enough the need to average down goes away, so exactly what's your definition of "learn to read the market?"

http://www.elitetrader.com/vb/showt...6934&highlight=bells+and+whistles#post3266934 ..dare, there are a lot of ways to read the market,, I trade what I know and avoid most of the other ways,less skilled there, primarily trade off of this premise,and i use the averaging method to avoid losses,if you have the time, it's easy to learn,just hand chart it for a few months from open to close day hours,and by osmossis, your hand will know where the next letter is going,it will force you to notice every tick,or at least every 30 minute timeframe then apply that to multiple timeframe charts,it's a market profile chart, without the market profile applications, it's simply the ledge nip and cleave for reference points/targets...in the late 80's it worked great for a day trader ,since the computerized trading started, more info everywhere,it works still as a daytrade tool,but when the wind kicks up, it's more profitable for swing

 

[Daring]

Quote from RedTankEra:


If you want help, send me a PM, I would be willing to give you a starting hand.

For the sake of the discussion and the readers, would you mind providing your help right here instead of privately?

 

[Daring]

Quote from ammo:

http://www.elitetrader.com/vb/showt...6934&highlight=bells+and+whistles#post3266934 ..dare, there are a lot of ways to read the market,, I trade what I know and avoid most of the other ways,less skilled there, primarily trade off of this premise,and i use the averaging method to avoid losses,if you have the time, it's easy to learn,just hand chart it for a few months from open to close day hours,and by osmossis, your hand will know where the next letter is going,it will force you to notice every tick,or at least every 30 minute timeframe then apply that to multiple timeframe charts,it's a market profile chart, without the market profile applications, it's simply the ledge nip and cleave for reference points/targets...in the late 80's it worked great for a day trader ,since the computerized trading started, more info everywhere,it works still as a daytrade tool,but when the wind kicks up, it's more profitable for swing

Been obtaining a lot of good ideas from your current and past posts, thank you for taking the time, much obliged.

 

[heywally]

I average down but only in small increments (therefore, ETF's), only with indexes and not individual stocks and only up to a conservative total amount.

I also scale out into strength.

I only use futures contracts on the long side after the heavier selling and hopefully, after the dust has settled. The big guns.

So, I normally run the trading like a retail business utilizing ETF's, where I acquire inventory at good prices (buy lower) and then gradually sell into strength. And you never want your inventory to get too large.