"no mortgage guy" gave reckless advice... oldtime has made numerous exaggerations that are without basis-- hence they get called out. What dont u get about that ammo?
I would like to discuss averaging down
- Thread starter Daring
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"no mortgage guy" gave reckless advice... oldtime has made numerous exaggerations that are without basis-- hence they get called out. What dont u get about that ammo?
Your problem ammo is you tend to raise these posters up on a pedestal on the basis of select snippets... all the while disregarding the big picture... I prefer to do the opposite.
Losers average losers.
I just got laid.
And that`s my average. I always average my winners!
I just got laid.
And that`s my average. I always average my winners!
link............?
Of course - it happens... however - the profit was captured by RE-ENTRY. Herein lies the key to maximizing risk:reward and eliminating skewing profit factor -- which CANNOT be avoided when averaging down.
Your analogy misses the mark oldtime.
Incidentally - for those who don't want to trade support and resistance and consider it voodoo or ineffective -- here's a tip on a high probability strategy that in essence involves s/r - but not based on the traditional textbook description:
Price has been in a downtrend. A series of lower lows -- let's say daily lows. Price gaps up... then fades... proceeding to test the prior day's low. The traditional countertrend trade would be to use yesterday's low as support with a stop below - with entry just prior to that level. The stock appears weak- and the level doesn't hold - boom - stop out. However- after putting in a new low - price reverses... and trades back thru the previous low. The trigger entry is a penny above that prior low- with a stop just below the new low of day.
Anyone familiar with Art Cashin will no doubt recognize this as an "outside day". Also known as a "push thru failure day". Can also be construed as a "bear trap" if you will in essence.
Redler calls it a Red Dog Reversal. Regardless of the name - the setup is highly reliable.
And the beauty is it also allows traditional traders like me an ideal opportunity to get back in a trade.
It depends on your system. For example in the ES, 90 percent of the time the intraday range will revert into some % of itself. The problem is we don't know how much it will revert, so adding to a loser is a 50/50 proposition for getting out even.
- think its better to hedge a trade than average down. Example if you are short the ES at a resistance area, go long QQQ calls. The problem is how to determine the correct expiry and analysing the correct ratio to hedge.
Another method instead of averaging down, is going long ES in one account and shorting ES in another account for a net zero position then take off each side as price oscillates intraday above and below your entry
Now how to backtest these hypothesis for profit extraction?
I am not sure if averaging down just to get out at break even is a good idea, but I like your idea about going long in one instrument while going short in another (it would be great if they have low correlation). However, I don' t think you have taken commission into consideration for trading that one instrument (going long and short) with two accounts. I think there is an alternative to that but it requires much more patience.
PA