spy,on a 1 day mp,at the moment nip 1 is s/r,above we go to cleave 2, below we make a tail 3, edit we got the tail, dvol over uvol ratio is now 2.8/1,if you were watching this you would have stayed short and not picked a bottom, now we are in the cleave of the 4 hr chart with that tl and ledge around 144.68,you like to reduce here, any part of the cleave is a touch and a possible reverse, i will wait ,watching that ratio,if it doesn't shrink, sit tight
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I would like to discuss averaging down
- Thread starter Daring
- Start date
Quote from SteveNYC:
Check out $COSTaverageMAN and his Want to Share posts on Elite Trader. He averages down and makes a bundle. How he does it is mystery to me.
He averages down he ain't certainly a loser. Ironically, the best trader that I have come across on ET.
Interesting.
Averaging down is not really of interest for me as I am not interested in averaging down. At least not with my current methodology. But I always keep an open mind.
Questions:
1) Why is it a mystery how he does it?
I certainly understand how averaging down can be profitable, but there is no doubt that there are ways of trading that are more profitable and less risky. If you are to do it though, I think it`s mandatory to have very strict rules for how you enter and when to exit (and respect it).
2) How do you know how much money he makes?
3) How do you know how much money he loses?
I`ve seen a few averagers on this site post trade entries, but there is no transparency, so I really don`t know how much size they`re holding when winning and losing. I`ve seen a few here who average down and according to themself holds their maximum size, then moves their stop AGAIN, and adds even more, only to puke it all at the very top.
I suspect that a lot is given back on those rare occassions where they refuse to admit they`re wrong, assume high leverage and pukes at the turning point after a 50 point adverse move.
you could get out here at 31 or 32 es against the cash at 1437 or hold for the 1403 cash below, normallymthat wide nip on the right would provide supp but you have a 2nd gap below and the riots in spain are bearish, so a compromise would be to reduce the short at 31 or 32
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got flat at 32 and 29,when you hit a lrge nip,you've reached target ,could be support or continue thru but whichever direction it's going ,go with it to target,an up move would test the cleave ,or the nip could fail and we drop to next target this is just using mp alone in one timeframe example,you need to check it against multiple timeframes, you can add in correlating markets and trendlines,recognized patterns
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lol, you make it sound so easy (not making a mockery).
I printed this out, pasted it next to my machine.
I printed this out, pasted it next to my machine.
Quote from Dustin:
The notion that averaging down is for losers is absolutely incorrect. For a new trader with no risk management it can be very dangerous, but if you have your rules in place it can be the difference between failure and success. Obviously the usual place for averaging down would be a reversion-to-mean (RTM) trade. I'm not talking about midday news 5-10-20% news spikes, just morning or afternoon unusual buying/selling. When I see an RTM setup (which is where I make most of my $) there's an automatic thought process that happens.
1-How far is this likely to go?
2-How big do I want to be at the max range?
3-If I want to start scaling now what size should I start with?
4-After my initial position if I scale in every 5-10-20c what size do I place if I want to end up with my max size, at my max risk?
I don't cognitively think about these. I'll pull up a chart and in the back of my mind think (ok this may go $1-2 more in the next 1 hour, if that happens I want to have #k shares, if it goes further my max loss is $$k so that would get me out around xx.yy price. If it doesn't go to the extreme price I want to at least have xxxx shares, so I can make yyy to zzzz dollars.) This thought process literally takes a few seconds, and I'll usually already have my first lot. It becomes instinctive once you trust the edge.
Personally my max single RTM loss is around $10k. I hit this only twice this year. Find your comfort level and trade accordingly with rules in place and it won't be a problem. If I couldn't average down I would be working at Burger King right now.