Why?
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I would like to discuss averaging down
- Thread starter Daring
- Start date
Why?
the topic is averaging down and it was a good thread until you insisted we all talk about your edgeQuote from riffrafffpatrol:
Why?
take it to the edge thread
otherwise, it's because I own the table with an edge and all the shooters think they have one
the ones that crack me up are the losers who keep doubling in hopes that sooner or later they will make their point
Quote from SatMir:
its extentions.how?what?
Well... not sure if this is what you are looking for- but typically under normal settings- bollingers will look at 20 periods and wrap lines around a +/- 2 std deviation range. The area within represents 96% approx of price distribution. When a large spike occurs outside - it indicates an extreme... and that a reversion to the mean is imminent. The false sense of security occurs here however- as while it is 100% certain that price will indeed revert to the mean (the 20 sma/ema)... what is not certain is if the mean reversion will be higher tham your entry if long or lower than your entry if short. Price can pierce for an extendec period... thereby driving the mean higher or lower... resulting in a negative postion when its all said an done. Indicators such as these should only be used as a confirmatiom tool... but not as a trigger in and of itself.
Quote from oldtime:
the topic is averaging down and it was a good thread until you insisted we all talk about your edge
take it to the edge thread
otherwise, it's because I own the table with an edge and all the shooters think they have one
the ones that crack me up are the losers who keep doubling in hopes that sooner or later they will make their point
I"ll tell you why:
It's becausr the rules of the game dictate that the probabilites are in your favor... plain and simple.
Let's take blackjack. Each hand is independent of the other, correct? Does Vegas have an edge on a single hand? Of course not. Uncertainty exists...regardless of what happened on any other hand in the past-- a hand stands on its own merit. At any given time- a random bettor can take Vegas to the cleaners. HOWEVER-- based on the rules of the game- Vegas knows that over a statistically meaningful number of hands- they will always come out ahead. Why? Because the rules of the game dicate that the probabilities/odds are in their favor. That is an "edge".. and there is nothing different from this analogy to that of trading.. plain and simple.
ok, get one of your rules and put it on the computer and run it out and tell me when it finally hits ruin. Because they all do. The only one that won't is Martingale, and that assumes you have an infinite supply of capital and no betting limits.Quote from riffrafffpatrol:
I"ll tell you why:
It's becausr the rules of the game dictate that the probabilites are in your favor... plain and simple.
Let's take blackjack. Each hand is independent of the other, correct? Does Vegas have an edge on a single hand? Of course not. Uncertainty exists...regardless of what happened on any other hand in the past-- a hand stands on its own merit. At any given time- a random bettor can take Vegas to the cleaners. HOWEVER-- based on the rules of the game- Vegas knows that over a statistically meaningful number of hands- they will always come out ahead. Why? Because the rules of the game dicate that the probabilities/odds are in their favor. That is an "edge".. and there is nothing different from this analogy to that of trading.. plain and simple.
Quote from oldtime:
ok, get one of your rules and put it on the computer and run it out and tell me when it finally hits ruin. Because they all do. The only one that won't is Martingale, and that assumes you have an infinite supply of capital and no betting limits.
This has zero to do with risk of ruin scenarios... You are digressing here. I'm talking about trading edge as in strategy... not optimal bet/position size/risk mgmt.
An edge is completely worthless w/o proper risk management... it doesnt take a genius to figure that out... but this is moot regardless.
it isn't an edge if it has risk of ruin. Maybe it's just semantics, but when someone claims they have an edge it just sounds to me like they are trying to be a big shot, like they own a casino, when in fact they are just lucky (or very skilled) betters.Quote from riffrafffpatrol:
This has zero to do with risk of ruin scenarios... You are digressing here. I'm talking about trading edge as in strategy... not optimal bet/position size/risk mgmt.
An edge is completely worthless w/o proper risk management... it doesnt take a genius to figure that out... but this is moot regardless.
Quote from riffrafffpatrol:
Look -- let' say price has deviated from a mean-- let's just say for example-- price falls outside 2 std deviations on a 15 min chart-- outside of approximately 96% of its normal distribution range. A large candle spikes through and significantly pierces a 20ema bollinger band-- into a level of demand where one can look to the left of the chart and see the last time price entered this demand "zone" (not a specific price... but an "area"... not an exact top/bottom)-- it spent little time at the level (indicating a major supply/demand imbalance) -- it left the level with large extended range candles (indicating momentum behind the move)-- and it ran up a significant distance from the level (indicating high profit potential). At the same time-- the indexes are all in demand on their 15 minute charts-- and on the larger timeframe the SPY has just touched the 200 SMA. Oh- and the stock is relatively strong to the market-- despite the downtick. I WANT FULL POSITION ON! I don't want a partial position! There is ZERO value in that. Why? Because the probabilities are extremely high that this trade will work. If it doesn't- I take my 1R loss and move on-- waiting for either the next high probability level below-- or getting back on board if price reverses and indicates the RTM is coming to fruition-- or simply move on to the next opportunity in an entirely different stock.
Do you actually trade this way intraday? Are you consistently profitable?
its not a fools game this is how morgan and goldman trade, you've again provided a skewed vision that pigeonholes your mental capacity,i e bollinger bands,nothing wrong with that if its your preference,but if you are wearing blinders,you wont grow and your tool box may come up short as the market changes,for instance, the vanishing return to the mean,just an if..the example says that you selll into a general area rather than a specific priceQuote from riffrafffpatrol:
Look -- let' say price has deviated from a mean-- let's just say for example-- price falls outside 2 std deviations on a 15 min chart-- outside of approximately 96% of its normal distribution range. A large candle spikes through and significantly pierces a 20ema bollinger band-- into a level of demand where one can look to the left of the chart and see the last time price entered this demand "zone" (not a specific price... but an "area"... not an exact top/bottom)-- it spent little time at the level (indicating a major supply/demand imbalance) -- it left the level with large extended range candles (indicating momentum behind the move)-- and it ran up a significant distance from the level (indicating high profit potential).
It is a fools game plain and simple.
Give me some examples AMMO where you have used it. Prove your thesis.