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I would like to discuss averaging down
- Thread starter Daring
- Start date
Quote from riffrafffpatrol:
Bump-- Dustin...?
Dude, stop trolling. If anything Dustin could teach you a few things, he's a good trader whos been around for a while.
Also, different trading vehicles have different personalities. Nothing trades exactly the same. Dustin, may very well have an edge in the way he executed the trade.
Quote from oldtime:
averaging down is the good winning strategy, it's pretty obvious you haven't figured out how to do it profitably. You should spend time developing it. Once you get the hang of it, it's as easy as pulling a rabbit out of a hat.
Maybe you should clarify how average? Are you constantly trading around positions or are you using it as a tactic to get out of a bad trade. There is obviously a big difference between the two. Any trader that i met that does well with averaging usually is very good about trading around positions and knows when to add and when to bail!
when we use to test those systems on monte carlo, we looked for one that broke even minus the commish. If it made money or lost money we figured it was curve fitted.Quote from Pension_Admin:
I am not sure about that, but the study need to be controlled. There should be three scenarios: one is with edge, one is no edge, and one is with negative edge.
PA
If it consistently broke even then it was a solid system that could be used as a foundation to trade off of. 90% is money management, 10% is reading the market.
Quote from oldtime:
If it consistently broke even then it was a solid system that could be used as a foundation to trade off of. 90% is money management, 10% is reading the market.
If a system consistently broke even, would that system be like that of a fair coin toss where probability of winning and losing are the same, and in the long run you will breakeven?
If that is the case, then does average down help? Would you eventually breakeven in the long run after "delaying the losses"?
1986, which by the way is when i started using mp,couldn't afford the $2500 class fee,so once i learned how to draw the chart, and noticing the repitition and reversion to the mean,drew my own rules,i know people like him,knows where every dime goes,very calculated risk taker as he's averse to it,he trades a style that fits him,his main theme is he know's the value of money and respects it,i haven't half his discipline,to your next question on shorting and covering a loss to short higher,i found it was rare i couldn't trade out of it and re-average higher until the turn comes,i have also gone too large and jumped out just before the woosh to the downside,tried to find the trade posted in cl redux but could not, a short up into 106 cl ,jumped out above, and it dropped like a rock, by being stubborn and not reducing when it went against meQuote from riffrafffpatrol:
ammo... u surprise me... u really do.
"Wise"? If u can't spot the glaring egregious reckless comments in his posts... I am floored... truly.
P.S. I have been trading for just over 23 years actively now... fyi. How about you?
my trading is based on reading an mp chart,averaging is just how i choose to approach it,it makes a bell curve that reverts to the nip ,on a daily,apply that to multi day or week or month or year and you can catch much bigger moves than the 3, 4 ,or 5 on a daily chart,you just have to sit thru it and protect your position and acct..on the chart below,similar to the daily posted yesterday with several bell curves,there is a large bell curve with the large nip broken as support and a nice down trend with a gap below,just as you would trade a one day chart, you trade the time it takes to build that and where price is related to that nip,so longer term you would expect it to reach that 40-44 area, or nip below at 36,on a larger chart that nip is 1406, you short and wait for it to get there ,hoping to have defended your position ,adding,reduceing,and being able to keep a good avg price to profit from when it hits there, this is just an example, you would look at several timeframes to determine the best target ,i found that i can't time tops and bottoms,nor scalp any more so my trading has morphed into thisQuote from Daring:
Ammo,
You have kindly and clearly explained how you use a combination of trendlines and market profile peaks and low points to gather confluential areas of resistance, to short, and confluential areas of support, to cover or reduce.
In a discussion board where profitable traders tend to use secrecy or disguise to explain their success you are completely the opposite, transparent, helpful and caring, for that you must be commended.
At the same time, you have all also expressed efficiently and unequivocally how the downside is faster and how the upside tends to have less monstrous moves. For instance, we have heard of Black Swans but not of "White" Swans, if I may call them that. You have even discussed your money management and risk management, once again, thank you for taking the time,
However, here's the part I can't figure out yet because I think it has not been explained, if it has, I apologize before hand.
Have you tried shorting resistance using a fixed stop, then re-entering at the next level or upon lower high confirmation ? If so, what obstacles did you encounter upon testing this? Death by a thousand stops ? Missing the move ?
Your input in this grey area is greatly appreciated.
that I don't know. The mathmaticians did all the testing. I wasn't averaging down back then. But I suppose if you could predict that the market would chop as reliably as a coin toss goes from heads to tails you could safely average down until the 28 in a row streak wiped you out.Quote from Pension_Admin:
If a system consistently broke even, would that system be like that of a fair coin toss where probability of winning and losing are the same, and in the long run you will breakeven?
If that is the case, then does average down help? Would you eventually breakeven in the long run after "delaying the losses"?
My non mathmatical anecdotal observation is the market chops 80% of the time and trends 20% of the time. So 80% of trends fizzle out. But the 20% of the time it trends makes me all my money.
Where does averaging down fit into that? In the chop
Where does averaging up fit into that? In the trend
how to figure out when it is going to chop and when it is going to trend? I haven't figured that out yet
but without averaging down you are either good at bypassing the chop, or you are bypassing 80% of the market action