If you use stop losses then you are essentially gambling

wxytrader said:
Have you guys never heard of averaging down lol? It's not the martingale system. There is no getting stopped out or taking losses...there is no doubling of position size... completely different. It's also nothing new...it's how you get a weighted average lol
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@wxytrader, stock was 10 and you bought Calls with DTE=45 and strike 11.
A week later stock falls to 9.
Will you AverageDown your current position? :)
 
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Quanto said:
@wxytrader, stock was 10 and you bought Calls with DTE=45 and strike 11.
A week later stock falls to 9.
Will you AverageDown your current position? :)
More...

You don't do this buying calls...I never just buy calls of puts. You could do it selling puts. Anyway, if I legged into the stock at $10 with a plan to average down then yes I would average down. The problem is retail, through a campaign of fear, have been brainwashed that they MUST place stops OR ELSE YOU WILL BLOW UP YOUR ACCOUNT! It simply isn't true. Every profit I have made comes from first being down, even substantially sometimes.

ALSO this is all a moot point because stops DON'T protect you AH when it matters most lol...so essentially anyone who holds a position over night isn't using stops.

Now a caveat...this is not for single stocks unless you scale down. This is purely for indexes or etfs.

Here is a real world example:
https://www.elitetrader.com/et/thre...skills-were-trash.377987/page-49#post-5927451
 
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@wxytrader, study the power of compound interest... :) :
EndVal = StartVal * (1 + rPct / 100)^n
where n is the number of periods to repeat, like months,
and rPct is the growth pct (ie. interest yield) for the single period.
EndVal is of course the end value after n periods.

The other traders you critisize might apply exactly such a calculation and see that it makes sense to cut losses ... since, as the above formula shows, time is indeed money... They don't want to waste more time by waiting for a possible rebound...
It's a kind of optimization problem.
See also https://en.wikipedia.org/wiki/Time_value_of_money

And: many traders are bound to firm rules (esp. prop traders) that allows only a minuscule loss...
 
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wxytrader said:
You don't do this buying calls...I never just buy calls of puts. The game is totally rigged with premium, spread, time decay, fees etc.
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Quanto said:
@wxytrader, study the power of compound interest... :) :
EndVal = StartVal * (1 + rPct / 100)^n
where n is the number of periods to repeat, like months,
and rPct is the growth pct (ie. interest yield) for the single period.
EndVal is of course the end value after n periods.

The other traders you critisize might apply exactly such a calculation and see that it makes sense to cut losses ... since, as the above formula shows, time is indeed money... They don't want to waste more time by waiting for a possible rebound...
It's a kind of optimization problem.
See also https://en.wikipedia.org/wiki/Time_value_of_money
More...

So they are going to be a slave to their computers day trading to try to return the same 20% (I doubt it) that I made lounging on my couch? They might as well just get a day job.

Here is the formula I use:

Couch time = Start date - Time spent to place the trade - Time spent to average down
 
wxytrader said:
So they are going to be a slave to their computers day trading to try to return the same 20% (I doubt it) that I made lounging on my couch? They might as well just get a day job.

Here is the formula I use:

Couch time = Start date - Time spent to place the trade - Time spent to average down
More...
Oh, oh.... :)
Unfortunately you grasped nothing of what was said...
Wish you luck - you will neeed it... :)
 
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