Kudos to MMs
- Thread starter nitro
- Start date
Don't mind me saying, but this whole NFV hocus-pocus is just a mean reversal strategy with heavy averaging down.
Obviously there was no edge at 14 because it went to 24 and now almost at 30. How long can you average down and what happens when you eventually and inevitably run into a strong trend???
Obviously there was no edge at 14 because it went to 24 and now almost at 30. How long can you average down and what happens when you eventually and inevitably run into a strong trend???
Who is to say that we will be on the wrong side of a strong trend? Can it happen? Sure it can, but it remains to be seen.
It is important to remember that the trend has to go in that direction _and_ NFV doesn't go with it. That sort of happened once when we had 70 divergence, and had 6 add points! This is our worst case scenario as of now. It is our outlier. Six add points is only possible for an extremely well capitalized trader trading seven figures. If you are trading a $25k account, you have to be waaaaaaay more conservative and wait for 24 edge or more.
If you are poorly capitalized (< $100k) a typical bad move where the rubber band doesn't snap back will have you in two add points losing $5k on two contracts, on a stop loss. A 5% loss, but an extremely rare event (once a year?) so from what we have seen.
I would call an indicator useless when the market goes 70 pts against its supposed edge.
But that is my whole point. If I am allowed to average down up to 70 pts, why do I need the NFV? Why can't I just pick ANY price level and ANY direction and if it goes my way, profit, if it goes against me, average down? Since the market fluctuates even when trending, if my averaging down positions are far in between and my account size is big enough, chances are I will/can come out of it with a slight gain, no NFV needed...
Dude, do you even trade? Why keep track of cards at BlackJack if I can lose 30 times in a row with edge? Of course it can happen, it doesn't mean there is no edge in counting cards! Even the tiniest of edge with low costs and proper money management will turn you into a gazillionaire, over many trials. If your argument is that NFV has no edge, well then we can't even get started. Try buying and selling random points and adding randomly and see how you do.
If your fear is that you can get caught selling a terrible uptrend, then you can add one filter that might get you out of a bull trend that for some reason NFV is not following: Bull markets have >85% of stocks following their 100 MA. Use that to stay out of selling strong bull markets that NFV __may__ or doesn't see. Otherwise, just stick to the system.
Can I do it in this journal? As a test against or parallel to your NFV. I didn't say I will add randomly, but YOU can pick the entry and I will manage the trade, averageing down even following your Fib rule if you like.
It would be interesting to see how I do it using random entries, but managed position...The point is that it isn't your NFV what makes the strategy profitable but position management...
Or I can just trade against your edge to see how it works. Maybe we should wait until the market and NFV get close to each other again.
I have to object to the claim about position management. I'm trading using nitro's NFV numbers, in a smallish account, using SPY options. Due to the pattern day trader rule (did I mention my account size?), I am unable to "manage" my position intraday. I enter on a +24 or greater divergence, and ride it out until convergence. This has meant lately that the position is open for 4-5 days.
I haven't lost money yet.