I would like to discuss averaging down

WS_MJH · Sep 22, 2012

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.

I don't need to learn how to average down: I'm all good. But it does seem you need to learn some basic trading tactics considering you delineated your significant losses in a post on this thread that you recently just deleted. Keep working with that rabbit.

Pension_Admin · Sep 22, 2012

Quote from oldtime:

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.

I wish I have enough money to average down 28 times in a row. Even if I could average down 10 times in a row, it would be enough for me to continuously delay the losses in a fair coin toss with a couple of non-correlated average down strategies.

Pension_Admin · Sep 22, 2012

Here is a question for you, oldtime.

If you have a system that has an edge, does it matter if you use average down vs. random position-sizing?

Daring · Sep 22, 2012

A question I would like to present is....

What's wrong with taking a realized loss and resetting vs unrealized red and possible climbing ?

oldtime · Sep 22, 2012

Quote from WS_MJH:

I don't need to learn how to average down: I'm all good. But it does seem you need to learn some basic trading tactics considering you delineated your significant losses in a post on this thread that you recently just deleted. Keep working with that rabbit.

you are correct, I deleted it, it was too much information

the losses you were referring to were just recently incurred in a trade gone bad

-20%
-5%
+8%
+4%

I still haven't added them all up and have moved on and recovered a little

like I said what made it so bad was I had no more money to do anything with, so I "bailed" as they call it

Like I said, I have endured much larger drawdowns, but that was with plenty of dry powder

as far as trading plans go I have one, and would never suggest that anyone does it your way as you did, so you keep doing your thing and I'll keep working on mine

live and let live I always say

but thanks for the suggestion

oraclewizard77 · Sep 22, 2012

If you have a stop and average into a trade before your stop is hit, then there is no problem. If you just keep averaging down just hoping the market turns around then you have a problem.

Daring · Sep 22, 2012

Quote from oraclewizard77:

If you have a stop and average into a trade before your stop is hit, then there is no problem. If you just keep averaging down just hoping the market turns around then you have a problem.

Then perhaps the stop and entry location is where average down traders are currently struggling at.

RedTankEra · Sep 22, 2012

Quote from Daring:

Then perhaps the stop and entry location is where average down traders are currently struggling at.

Absolutely, otherwise there would be no need to risk being right on small size and feeling ambiguity and relying on hope on bigger size.

Any trader averaging down is absent minded of bar entry techniques, that's why they need to do it, there's no other reason really.

the1 · Sep 22, 2012

This happened to me a lot early in my career. I would re-enter at the stop location if I had a good feeling it would reverse after taking me out. To this day, I average down (and up) but it has to be done within reason. You have to have a max loss limit in place or you can get really stung. Like everything associated with trading, averaging is more an art than a science.

Quote from oldtime:

right, that's all I do all night long is add to losers, but I also add to winners. It wouldn't work for me if I didn't do both, but I am always spread. One big loss is the same as many little losses, I started averaging down when I realized I was geting stopped out at exactly the place I wish I had entered.

the1 · Sep 22, 2012

Disagree. It's the random element of the market that makes averaging at certain times a viable strategy. You can't just do it blindly, however. It has to be done strategically.

Quote from RedTankEra:

Absolutely, otherwise there would be no need to risk being right on small size and feeling ambiguity and relying on hope on bigger size.

Any trader averaging down is absent minded of bar entry techniques, that's why they need to do it, there's no other reason really.