Quote from bone:
From the traders I have dealt with, averaging is problematic for two reasons:
1. They invariably give back huge amounts of capital when the mean decides not to revert, and
2. It is just a very painful way to go about life. Way too much emotional trauma and few souls can really effectively deal with it over a career ( or a month sometimes ).
You get sucked into numerous modest winners and then you get whacked. You get whacked because you probably are not using the correct timeframes to see the larger trend that just sodomized you, and you get whacked because you are adding and adding because this is really cheap what are these dickheads thinking selling these at this price my God I will buy some more... Oh shit, the close is fifteen minutes away and we are still making new lows.
